Asian shares fell and the euro slipped overnight as short covering rallies ran out of steam, but some analysts said global markets may have finally found support after a heavy selloff in May.
European shares were expected to eke out small gains, with financial spreadbetters calling London's FTSE 100 to open up 0.2 per cent. But concerns about the euro zone's fiscal frailty lingered.
Oil, which has been tracking moves in the euro and stock markets, fell back from a six-week high, while gold, which tends to gain from falling share markets due to its safe haven appeal, firmed to near its highest in a week.
Japan's Nikkei share average fell 0.7 per cent, after five days of gains had brought it to one-month highs, while MSCI's index of Asian shares outside Japan eased 0.1 per cent.
Such a technical pattern on price charts could indicate that stocks are poised to move higher, but investors remain wary after a nerve-wracking slump in global financial markets since mid April.
US stocks ended flat on Tuesday after mixed economic data and a cautious outlook from bellwether FedEx Corp. But the S&P 500 held above its 200-day moving average, seen by many market players as a key momentum indicator, a day after breaking above that mark for the first time in a month.
World stock markets had been gaining for the best part of a week, partly on a technical rebound from heavily oversold levels and partly as many investors took a relatively positive view of the global economy - and hence corporate earnings prospects - with the risk of a "double dip" recession seen as easing.
A bigger-than-expected fall in US housing starts among yesterday's data pared gains in high yielding currencies such as the Australian dollar which eased from a 1-month high.
The euro fell back from a two-week high to trade around $1.2275. After failing to break above $1.2350-55 twice in the past 48 hours, the euro is at risk of retreat to around $1.2175, a 38.2 per cent retracement of its rebound from a four-year low below $1.19 set last week, traders said.
The market will be watching a Spanish bond auction later in the day after the spread of Spanish government bond yields over benchmark Bunds soared to a euro lifetime high on Wednesday.
EU leaders will meet today to review the findings of a task force set up to look at reforms designed to prevent a repeat of the euro zone debt crisis. They will also discuss the creation of a permanent aid mechanism for countries in debt trouble.
The leaders have agreed on a €500 million safety net to help struggling countries that use the euro and a €110 billion aid mechanism for Greece. But despite repeated denials, they have not allayed concern that Spain will follow Greece by seeking financial help.
REUTERS