Investors gave up a brief flirtation with higher stocks and a higher dollar on Friday as world equities fell and the dollar climbed.
Wall Street looked set to open lower.
In recent months, the U.S. currency and equities have moved in opposite directions, with the former getting hit every time risk appetite bolsters the latter and vice versa.
Earlier on Friday, this correlation broke down. But it proved only temporary as the stronger dollar weakened commodity prices and stock investors retreated.
"We're still stuck in a tight range, and this could last until December," said David Thebault, head of quantitative sales trading at Global Equities in Paris.
Investors are heading towards year-end seeking firm proof that the global economy is rebounding rather than just not getting worse. But at the same time there is a strong tendency to want to lock in profits.
This may be having some effect on the dollar, which has benefitted from the profit-booking in higher-yielding currencies.
"Hedge funds are cashing out their positions to prepare for year-end redemption requests from their clients. And that move is encouraging others to take profits as well," said the head of a trading desk at a big Japanese bank.
As a result, the dollar was steady to up 0.6 percent against a basket of major currencies. The euro slipped nearly three-quarters of a percent to $1.4809 and Britain's pound was down 1.2 percent at $1.647.
The steady dollar did not push gold lower. It was down more than $8 an ounce at $1,135 an ounce, well off its record high reached on Wednesday.
Gold tends to rise when the dollar falls because the metal becomes cheaper to non-dollar investors.
EUROPEAN STOCKS BOUNCE
MSCI's all-country world index (.MIWD00000PUS was down 0.6 percent adding to a 1.6 percent fall on Thursday. It was heading for a weekly loss despite hitting a year high on Monday.
European shares turned tail and were heading for a fourth consecutive day of losses.
The FTSEurofirst 300 index of top European shares was down 1 percent.
Earlier, Japan's Nikkei fell 0.5 percent and logged its first four-week losing streak in over a year.
Demand for euro zone government bonds rose.
