The euro hit a two-month low and European shares dropped on Tuesday after a dispute between international lenders threatened to further delay an aid payment to Greece.
Worries about the looming fiscal crisis in the United States, the ramifications of the political transition in China and the outlook for global growth also kept investors in a cautious mood, helping send commodity prices lower.
European shares opened down for a fifth straight session, dropping 0.5 percent to 1088.20 point in early trade. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were all down between 0.7 and 0.9 percent.
Greece's international lenders agreed on Monday to give Athens two more years to meet budget targets but the euro zone and IMF clashed over a longer-term target date to shrink the country's debt pile and no aid was disbursed.
"Few people would think that the euro zone will desert Greece. Still, the market will be frustrated by lack of a clear picture," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank.
Euro zone finance ministers are not planning to meet again to discuss Greece until November 20 so the market's immediate focus is on a Treasury bill sale in Athens, needed to refinance a 5 billion euro issue maturing on November 16.
Ahead of the debt the sale, the euro had dropped 0.3 percent to hit a two-month low of $1.2668, which hoisted the dollar index to a two-month high of 81.20.
Investors are also waiting for the German ZEW economic sentiment indicator for November, due later, which will give some insight into the extent of the slowdown in Europe's biggest economy for the fourth quarter.
German government bund futures, a traditional target of safe haven demand, jumped 23 ticks higher to 143.48, a fresh two-month high.
U.S. Treasuries also reflected the growing risk aversion with 10-year yields falling to 1.582 percent from 1.613 percent on Friday. The U.S. Treasury market was closed on Monday for the Veterans' Day holiday.
CHINA CONCERN
Earlier MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1 percent to hit a seven-week low after shares in China and Hong Kong fell sharply on worries over the outlook for the world's second largest economy.
The falls were triggered when China's state media reported that government curbs on the housing market would remain in place, raising fears that the ongoing Communist Party congress would spawn little change in economic policies.
The uncertainty over the euro zone's debt problems and the caution over a U.S. fiscal policy standoff spread across the commodity markets.
U.S. crude futures fell 0.8 percent to $84.90 a barrel and Brent dropped 0.5 percent to $108.52.
"There is plenty of oil and the market is well supplied, but the economic outlook both in the United States and Europe is weak and that's putting downward pressure on prices," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
Gold fell $2.70 to $1,725.04 an ounce, down from a 3-week high of around $1,738 struck on Friday. Despite the recent fall, gold is still up around 10 percent so far this year.
