World shares have struggled to stabilise as doubts about a recovery in tech stocks lingered after last week's rout, while the dollar steadied as investors pondered whether policy signals from the European Central Bank this week could weaken the euro.
Fresh tensions between Washington and Beijing after US President Donald Trump again raised the idea of decoupling the US and Chinese economies appeared to have little impact.
"I think the market will shrug this off as electioneering but may find the lining up of technology stock sellers harder to process as the US market returns from a holiday yesterday," said Chris Bailey, European Strategist at Raymond James.
World shares fell 0.1 per cent by 0835 GMT following gains in Asia overnight and a negative start in Europe, where fresh pressure on tech stocks dragged the STOXX 600 benchmark down 0.9 per cent following strong gains on Monday.
After US markets were shut on Monday for Labor Day, S&P 500 futures fell 0.1 per cent, reversing gains made in Asian hours, while futures in tech-heavy Nasdaq fell 1.3 per cent after having lost more than 6 per cent late last week.
While many market players were unable to pinpoint a single trigger for the Nasdaq's sudden plunge, valuations have been stretched given its sharp 75 per cent gain from a bottom hit in March.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent and Japan's Nikkei ended up 0.8 per cent . China's blue-chip index and Hong Kong's Hang Seng meanwhile gained 0.5 per cent and 0.2 per cent respectively, both erasing early losses made after Trump's remarks.
The newly launched Hang Seng tech index fell 1.4 per cent.
Trump's remarks followed the possible US blacklisting of China's largest chip maker, Semiconductor Manufacturing International Corp (SMIC), which has hit many Chinese tech firms listed onshore and offshore.
In foreign exchange markets, the dollar was slightly stronger against a basket of currencies at 93.115 and firmed marginally against the euro at $1.1816 with the main focus on this week's ECB policy meeting.
Most analysts do not expect a change in the central bank's policy stance but are looking at its inflation forecasts and whether it seems concerned by the euro's strength.
"Rangebound trading will likely remain predominant until Thursday when the ECB meets," UniCredit analysts said in a note.
Sterling fell to a two-week low against the dollar after the European Union told Britain on Monday there would be no trade deal if London tries to override the Brexit divorce deal it signed in January.
The pound slipped more 0.3 per cent at $US1.3135 while against the euro it touched 0.90 pence, also a two-week low.
Gold prices softened on Tuesday, although rising doubts over the economic recovery from the COVID-19 slump limited losses. Spot gold was little changed at $US1,9283.87 per ounce.
Oil fell below $US42 a barrel, its fifth session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
US crude futures fell 3.3 per cent to $US38.46 per barrel.
The 10-year US Treasury yield stood at 0.709 per cent, off a five-month low of 0.504 per cent touched in August.