Asian stocks fell on Wednesday after a slide on Wall Street overnight while the dollar was on the defensive with tensions in the Korean peninsula showing few signs of abating.
Spreadbetters expected European shares to follow suit, forecasting Britain`s FTSE to open 0.3 percent lower, Germany`s DAX down 0.4 percent and France`s CAC off 0.5 percent.
MSCI`s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent.
Japan`s Nikkei stooped to a four-month low and was last down 0.2 percent. Australian stocks lost 0.4 percent.
Shanghai dropped 0.25 percent while Hong Kong`s Hang Seng retreated 1 percent.
South Korea`s KOSPI was down 0.35 percent, with auto stocks dropping on concerns about their sales in China. The index has fallen in the past four days.
Shares in South Korea are "still closely eyeing further risks from the North," said Rhoo Yong-seok, a stock analyst at KB Securities in Seoul.
Simmering geopolitical tensions following North Korea`s biggest-ever nuclear test on Sunday kept risk appetite in check. Pyongyang is ready to send "more gift packages" to the United States, one of its top diplomats said on Tuesday.
Against this backdrop, U.S. stocks sank overnight, with the S&P 500 stumbling to its biggest single-day loss in about three weeks.
"Risks emanating from the Korean peninsula have a broad impact particularly in East Asia, but after a few days the effects begin to fade in other regions, like those of emerging markets," said Kota Hirayama, senior market economist at SMBC Nikko Securities.
Emerging markets are likely to shift their focus to the European Central Bank policy meeting on Thursday and then the Sept. 19-20 U.S. Federal Reserve`s Open Market Committee (FOMC) gathering, Hirayama said.
"The steady flow of foreign investor funds into emerging markets have shown signs of abating lately. Euro zone and U.S. monetary policies could prove crucial in dictating these flows."
The dollar posted losses, notably against the Japanese yen and Swiss franc, reflecting the risk-averse mood in the broader markets.
Investors are keen to see whether the ECB will send a message regarding the timing of an exit from its ultra-loose monetary policy.
Few expect the Fed to tighten monetary policy this month and will focus on whether it leaves the door open for a rate hike in December.
The greenback was down 0.1 percent at 108.690 yen after losing about 0.9 percent overnight, its biggest one-day drop in three months.
The Swiss franc was steady at $0.9548 per dollar having gained more than 1 percent so far this week.
The dollar suffered further after Federal Reserve Governor Lael Brainard said on Tuesday inflation was "well short" of target, in the clearest signal yet the central bank is getting more dovish in the face of weak data.
The dollar index against a basket of six major currencies was little changed at 92.313 after losing 0.4 percent the previous day.
The euro was flat at $1.1913 ahead of Thursday`s ECB policy meeting.
Government debt benefited from the risk-averse mood, with the 10-year U.S. Treasury yield extending its sharp overnight slide and falling to a 10-month low of 2.054 percent.
In commodities, safe-haven gold hovered near one-year highs as the dollar eased and flight-to-safety demand remained robust thanks to the North Korean risks.
Spot gold was effectively flat at $1,337.56 an ounce after touching $1,344.21 overnight, its highest since September 2016.
Crude oil prices edged lower after the previous day`s rally ran its course, with focus being drawn to Hurricane Irma moving towards Caribbean shipping lanes.
Crude had surged on Tuesday as the gradual restart of refineries in the U.S. Gulf that were shut by Hurricane Harvey raised demand.
U.S. crude futures was down 0.2 percent at $48.57 a barrel after climbing 2.8 percent overnight. Brent fell 0.4 percent to $53.16 a barrel following a gain of nearly 2 percent on Tuesday.
Copper on the London Metal Exchange was down 0.2 percent to $6,887 a tonne as profit taking nudged it off a three-year high of $6,970 set the previous day on robust Chinese factory growth.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)