Worries about Greek sovereign debt and a potential spillover elsewhere rattled financial markets again on Monday, squelching a tentative recovery by both European shares and the euro.
Stock markets were generally lower, the euro lost its early gains and Wall Street looked set to open flat to lower down.
World equities as measured by MSCI were down 0.2 percent, with emerging markets off half a percent. Japan's Nikkei earlier lost 1.1 percent.
The falls came despite efforts on European bourses to buck a three-day losing streak that culminated on Friday with a loss of 2.1 percent on Friday, the FTSEurofirst 300's largest daily fall in 11 months.
The European index was down 0.2 percent.
Investors have been generally shifting out of riskier assets as concern builds over Greece's financial woes and its potential to spread to other euro zone countries and even further out.
Bank of America Merrill Lynch encapsulated the concern in a note about Asia.
"(Portugal, Ireland, Greece, Spain) aren't big enough to affect the outlook for Asia," it said. "However, rising sovereign risk could become a more widespread issue, affecting market volatility and countries' ability to maintain supportive fiscal policy."
Monday's market losses came despite attempts by authorities to persuade markets that all will be well.
At a weekend G7 meeting, European finance ministers said they would make sure Greece delivered on its promises to slash its budget deficit by the end of 2012.
German Finance Minister Wolfgang Schaeuble was later quoted in a newspaper article on Monday saying that members of the Group of Seven industrialised nations were confident that the European Union will sort out Greece's debt problems.
The premium investors demand to hold Greek sovereign debt over core German paper rose after a Greek union said it could call a further strike.
The yield spread between 10-year Greek government bonds and benchmark German Bunds spiked to as much as 365 basis points, up from Friday's settlement close of 350 bps, before returning to stand little changed on the day.
EURO UP
The euro gyrated against the dollar after earlier gaining. It was trading around at multi-month lows.
"As long as EMU fears still loom and there is no strong signal from EU authorities that they will do something to tackle the situation in Greece, Spain and Portugal then euro downside potential will remain," said Roberto Mialich, currency strategist at Unicredit in Milan.
The euro was flat at $1.3664, down 4.5 percent for 2010.
Benchmark euro zone government debt yields were flat to slightly higher.
