World stocks fell on Wednesday after an overnight sell-off on Wall Street, with both Asia and Europe rattled by concerns over the sustainability of this year's equity rally.
The dollar was weaker against a basket of major currencies, although Wall Street looked set for a flat start.
Anxiety about the health of financials and worries the 2009 global stock market rally may have run its course hit U.S. stocks hard on Tuesday and then carried over.
Japan's Nikkei closed down 2.4 percent for the day and Europe's FTSEurofirst 300 was down 0.5 percent after earlier losing more than 1 percent.
It all took around three-quarters of a percent off MSCI'S all-country world stock index and the more-volatile emerging market component lost 1.4 percent.
Concerns have risen over the summer that stocks have risen so strongly since March that they are due a correction.
"The rebound from March has been remarkable. Year-to-date gains for most of the indexes are strong, although we are still below pre-Lehman Brothers levels," said Valerie Plagnol, chief strategist at CM-CIC Securities, in Paris.
"But the glass is still half-empty. Macro data has improved, but we're in a pattern of destocking-restocking, and the outlook for consumer spending is still grim."
As a result, the focus is shifting towards Wall Street, where the broad S&P 500 index has fallen 3.2 percent with three consecutive losing sessions.
It fell 2.2 percent on Tuesday.
"The question now is whether Wall Street will consolidate at this level or fall further," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
FOREX STEADY
The yen rallied broadly, hitting a seven-week high against the dollar and other major rivals as the falling share prices stoked more risk aversion.
"We are constructive on data, we are constructive on risk as well, but price action short-term tells us that the market is already positioned for a recovery," said Carl Hammer, currency strategist at SEB in Stockholm.
"We need some more consolidation in the coming days before moving higher in terms of risk appetite."
The dollar fell 0.2 percent to 92.69 yen according to electronic trading platform EBS, having earlier hit its lowest since mid-July.
The euro was up 0.1 percent at $1.42330.
Euro zone bond yields were also relatively steady. Two-year paper was yielding 1.181 percent and Bunds were yielding 3.222 percent.
