Asian shares, the euro, commodities and the Australian dollar all fell on Thursday as fears that Europe's debt crisis could unleash financial chaos prompted investors to shed riskier assets in favour of the relative safety of the dollar.
U.S. stock futures also fell, retreating from a Wall Street rebound on Wednesday, as leaders of the world's biggest economies began arriving in France for a G20 summit set to be dominated by the threat of a Greek exit from the euro zone.
Asian stocks dropped 1.8% and European shares were seen making similar losses at the start of trading, while oil, copper and the commodity-linked Aussie fell around 1% and credit markets weakened.
The leaders of France and Germany, angered at Greece's shock move to call a referendum on its latest bailout plan negotiated last week, told Prime Minister George Papandreou on Wednesday that Athens would not receive another cent in EU aid until it decides whether it wants to stay in the euro zone.
If Greek voters reject the 130 billion euro bailout package, which is conditional on harsh austerity measures, it could lead to a disorderly default, with the fallout affecting European banks and rippling across the global financial system.
Financial bookmakers in London called the FTSE 100 index to open down 1%, while Germany's DAX was seen down 1.7% and France's CAC-40 down 1.4%.
MSCI's broadest index of Asia Pacific shares outside Japan fell 1.7%, while S&P 500 futures traded in Asia lost 1.2%. Wall Street shares had gained more than 1.5% on Wednesday.
Tokyo's financial markets were closed for a public holiday.
ECB IN FOCUS
As well as watching events at the G20 summit in Cannes, investors were also focused on Frankfurt, where the European Central Bank was holding its first policy meeting under new President Mario Draghi.
Many analysts see the ECB as the only institution with the firepower to calm tensions, and the key question after the meeting — at which no change in interest rates is expected — will be whether it will increase its purchases of bonds issued by debt-ridden euro zone states.
On Wednesday, the U.S. Federal Reserve offered no new stimulus, but said it was mulling the possibility of buying more mortgage debt to spur a struggling recovery.
The euro fell 0.3% to around $1.3710 as investors took sanctuary in the dollar, which rose by a similar margin against a basket of six major currencies .
Adding to the gloomy outlook were surveys on Wednesday showing that the downturn in euro zone manufacturing in October was even deeper than previously thought.
The pullback from risk also knocked oil lower, with U.S. crude down 1% at $91.55 a barrel and Brent crude off 0.6% at $108.71.
Copper fell 1.1% on the London Metal Exchange to below $8,000 a tonne.
The Australian dollar , seen as a "risk" currency because it is heavily influenced by expected demand for Australia's natural resources, fell 0.9% to around $1.0248.
In Asian credit markets there was a widening of spreads on the iTraxx Asia ex-Japan investment grade index , which can be used as a gauge of risk appetite.
Gold , which in recent months has largely flipped from a negative to a positive correlation with riskier commodities as safe-haven seekers favour the dollar, fell 0.3% to around $1,733 an ounce.
