Global equities have languished close to two-week lows, while the dollar has cruised to a near four-month high against the euro as nervy investors worry Europe's COVID-19 response is lagging.
European markets opened lower on Thursday, with the STOXX index of 600 European shares down 0.1 per cent early following a US selloff and not helped by data showing the biggest rise since January 9 in new confirmed coronavirus cases in Germany.
The number of people with COVID-19 in French intensive care meanwhile set a high for 2021.
Extended lockdowns and worries about the pace of vaccinations across Europe hobbled the euro, which was down 0.1 per cent against the dollar, at $1.1807.
The dollar index had hit its highest since November 2020 overnight, at 92.697, breaking its 200-day moving average.
"The dollar is absolutely critical," said James Athey at Aberdeen Standard Investments.
"While the 'reflation trade' has been largely driven by US fiscal stimulus and thus growth and inflation expectations, it has also been driven by rising input prices coming from higher commodity prices.
"If the dollar starts rallying that becomes a problem."
MSCI's gauge of world stocks was 0.03 per cent lower, down for a second day and close to its lowest level in more than two weeks.
Its broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent, bringing it closer to wiping out all the gains it has posted so far this year.
Weighing on sentiment was a sell-off in Chinese technology shares due to concerns they will be delisted from US bourses and worries about a semiconductor shortage.
In Hong Kong, companies with US listings led declines. JD.com lost 3.57 per cent and Alibaba fell 3.91 per cent.
China's blue-chip CSI300 index edged 0.05 per cent lower, to its lowest close since December 11, weighed down by jitters about policy tightening and rising tensions between over alleged human rights abuses in Xinjiang.
US stock futures pointed to a steadier start on Wall Street after Wednesday's tumble, with E-minis 0.3 per cent firmer.
The US securities regulator is introducing measures that would kick foreign firms off US stock exchanges if they do not comply with auditing standards, and require them to disclose any government affiliations - measures widely expected to hit Chinese companies.
As well as concerns about extended economic lockdowns in Europe, disruptions to the distribution of COVID-19 vaccinations and potential US tax hikes also dimmed investor sentiment.
US crude fell 1.6 per cent to $US60.22 per barrel, and Brent fell 1.3 per cent to $US63.56 a barrel, giving back some gains made the previous day after one of the world's largest container ships ran aground in the Suez Canal, blocking the vital shipping lane.
Benchmark 10-year US Treasury yields rose to 1.6209 per cent, supported by positive data on the US manufacturing sector.
Germany's 10-year government bond yield was down one basis point to 0.37 per cent.