The euro hit a three-week low against the dollar and global stock markets dipped on Thursday as Spain's debt burden fueled worries about further problems for euro zone economies and curtailed investors' appetite for riskier assets.
Safe-haven U.S. Treasuries edged higher, along with gold prices.
Spanish 10-year government bond yields rose as high as 5.86% on Thursday, dragging Italian rates in their wake as investors fled to the relative safety of German and U.S. debt.
A poor Spanish bond auction on Wednesday added to worries that the impact of the European Central Bank's one trillion euro injection of cheap three-year funds into the banking system may be coming to an abrupt halt.
The MSCI world equity index was last down 0.1%, while U.S. stocks were little changed.
Traders cautioned that some of the moves may be exaggerated by thin trading ahead of an extended Easter weekend, and while global stock markets lost more than 1% of their value on Wednesday, they remain up almost 10% this year.
The Dow Jones industrial average was down 10.03 points, or 0.08%, at 13,064.72. The Standard & Poor's 500 Index was up 0.31 points, or 0.02%, at 1,399.27. The Nasdaq Composite Index was up 3.25 points, or 0.11%, at 3,071.34.
Energy shares gained along with the price of oil. U.S. crude was up $1.33 at $102.80 per barrel, while Brent crude was up 52 cents at $122.86. Exxon Mobil shares were up 0.3% at $85.20.
Offsetting some concern about the euro zone for U.S. stocks was data showing the number of Americans lining up for new jobless benefits fell to the lowest in nearly four years last week.
Spain's IBEX 35 index fell 0.1% and touched a 7-month low as concerns mounted about Spain's ability to meet its budget targets.
Europe's FTSEurofirst 300 index was up 0.1%, though banking stocks, many of which have large exposure to the region's lower-rated sovereign debt, edged lower.
UniCredit and Commerzbank, which both have exposure to euro zone peripheral debt, were also hard hit, down 3.1% and 1.7%, respectively.
Bucking the softer global trend, non-banking financial sector firms led Chinese shares to their biggest single-day gain since early February, after Premier Wen Jiabao said the monopoly formed by the country's big banks needed to be broken to get money flowing to cash-starved companies.
EURO WEAKENS
Against the dollar, the euro was down 0.7% at$1.3052, having hit a three-week low of $1.3038. It also hit its lowest in four weeks against the yen at 106.86 yen before recovering slightly to trade at 107.23 yen, down 1%.
Spain's cost of borrowing on markets over 10 years jumped 30 basis points on Wednesday after borrowing costs rose at the country's auction of bonds. The yield premium over German benchmarks is now 411 basis points, its highest since late November before the ECB flooded the market with three-year funds.
Safe-haven assets moved higher.
The benchmark 10-year U.S. Treasury note was up 5/32, with the yield at 2.2038%, while spot gold was up 0.6% at $1,628.34 an ounce.
Weaker prices tempted some buyers in gold but gains were capped by a stronger dollar and fading hopes of a fresh round of U.S. stimulus.
