The euro rose and shares slipped in Europe on Tuesday as mixed corporate earnings and concerns over Greece kept investors cautious ahead of a busy week which will include the first policy meeting of the U.S. Federal Reserve this year.
Russian markets were also jittery after a cut to the country's sovereign credit rating.
Investors will be keen to hear the Fed's response to the recent policy easing by global central banks such as the European Central Bank, whose long-awaited plan to buy bonds to revive the flagging euro-zone economy has propelled bond yields and the euro to multi-year lows and stocks to multi-year highs.
Although core bond yields held near those lows, lower-rated yields edged higher after Europe signaled it would not yield to a new Greek government's demands for debt forgiveness, though it showed a willingness to give Athensmore time to pay its debts. Top Greek shares were down 2.7 percent.
Credit markets were also jittery beyond the eurozone, with the cost of insuring exposure to Russia's debt up after Standard & Poor's cut Russia's sovereign credit rating to "junk" late on Monday, citing weakened economic growth prospects and Western sanctions.
"A lot of investors have been taken aback by the speed of macroeconomic adjustments," said Sean Darby, global equity strategist at Jefferies. "This is not the type of environment they like to invest in."
The pan-European FTSEurofirst 300 equity index was down 0.2 percent. European heavyweights Philips and Siemens were among those reporting disappointing earnings or outlook statements, while in the U.S. Microsoft Corp reported a fall in quarterly profit.
"Today's earnings show that global demand remains the big issue. Companies can take advantage of low rates, they can buy back stock but they cannot create demand and they will get hurt by global currency wars," said Lex Van Dam, hedge-fund manager at Hampstead Capital.
Most Asian share markets firmed on Tuesday. The euro clung to rare gains, up 0.9 percent to trade at $1.13455, taking it further from an 11-year trough of $1.1098 hit on Monday.
Investors widely expect the Fed to acknowledge the uncertain global outlook and stick to its promise to be patient on tightening. Yet its timetable remains for lift-off on rates by mid-year, a trajectory that presages further broad-based gains for the dollar.
Chinese markets continued their recent erratic path and the Shanghai index slipped 2.2 percent.
A snow storm engulfing New York is expected to keep many investment banks and fund managers on skeleton staff, though the main exchanges all plan to open as usual on Tuesday.
In commodity markets, U.S. crude was quoted 17 cents lower at $44.97. Brent fell 21 cents to $47.95. (Reporting by Lionel Laurent; Additional reporting by John Geddie, Francesco Canepa, Jemima Kelly, Karin Strohecker; Editing by Gareth Jones)