Asian shares fell on Tuesday, with falling commodity prices dragging on mining stocks, while the Aussie dollar eased after the central bank held interest rates and Canada's currency rose as the ruling Conservatives won a federal election.
The US dollar struggled to pull away from a three-year trough, while oil and copper prices eased as investors focused on the still-fragile state of the recovery in many developed economies.
A slew of data this week will help gauge the strength of the world economy, with particular focus on US non-farm payrolls on Friday.
"Everyone is waiting to see how uncertainties in the macro-economic situations of major economies will pan out," China Futures Co analyst Yang Jun said.
European shares were expected to open mostly down, with Euro Stoxx 50 futures shedding 0.4%, while S&P 500 futures fell 0.3%, pointing to a weaker start on Wall Street. Financial spreadbetters called London's FTSE 100 flat-to-higher after a four-day weekend.
MSCI's broadest index of Asia-Pacific shares excluding Japan fell 0.9%, with South Korea stocks losing 1.3% and Australian stocks down 0.8%. Japan's financial markets were closed for a public holiday.
"Our number one headwind for equities right now is the Aussie dollar," said IG Markets institutional dealer Chris Weston.
The US currency has been under pressure for months due to the Federal Reserve's ultra-loose monetary policy, which has opened up a yield gap between the dollar and currencies such as the euro and the Aussie.
The dollar index, which tracks the dollar against a basket of major currencies, crept up 0.1%, still not far from three-year low plumbed in New York trade.
The euro was around USD 1.4815, having risen to a 17-month high above USD 1.49 after surprisingly strong manufacturing data boosted the chances of another European Central Bank interest rate rise.
The Aussie eased from a 29-year high above USD 1.10 , to trade around USD 1.09 after the Reserve Bank of Australia kept interest rates unchanged, as expected.
The central bank, the first in the developed world to begin tightening policy in late 2009, said underlying inflation was likely to head higher, laying the groundwork for further rate rises in the months to come.
"That addition to the statement suggests they're preparing to move in the next few months -- though there's no sense of urgency about it," said Brian Redican, a senior economist at Macquarie.
The Canadian dollar edged up as provisional results from Canada's election showed the pro-business Conservatives cruising to victory, on course to transform their minority administration into a majority government.
The loonie has lagged other commodity-linked currencies, in part due to uncertainty about the outcome of Monday's election, with the opposition New Democrats pledging to raise corporate taxes, increase social spending and toughen climate change policies.
"I think generally this is probably very good for the Canadian dollar," said Firas Askari, head of foreign exchange trading at BMO Capital Markets. "We haven't had a majority government in some years and I think this provides a measure of stability that the market was looking for."
Oil, the asset often most sensitive to perceptions of geopolitical risk, fell nearly half a percent, but remained about USD 2 above the Monday low hit after news of the killing of Osama bin Laden in Pakistan by US special forces.
While the death of bin Laden could reduce the threat against the United States by militant Islamists in the long-term, the potential for retaliatory attacks in the short-term would support prices, analysts said.
"The potential of violence from retaliation has more upside than downside risks, and would support the market," said Serene Lim, commodities analyst with ANZ Bank in Singapore.
US crude futures eased 50 cents to USD 113.02 a barrel, while Brent crude fell 42 cents to USD 124.70.
Spot gold was a little firmer at USD 1,547.59 an ounce, after retreating from a record USD 1,575.79, and copper fell 0.3%.
Weaker industrial metals prices dragged on shares of big mining firms, with BHP Billiton down 1.4% and Rio Tinto 0.7%.