Asian shares slipped on Tuesday as a periodic bout of angst over China combined with the U.S. dollar's recent meteoric run to pile pressure on commodity prices.
Brent oil was near lows last seen in mid-2012, while gold came off a nine-month trough and copper a three-month low on fears a survey out on Tuesday could show stalling factory growth in China.
The HSBC flash reading on manufacturing (PMI) for September is expected to dip to the flat level of 50.0 from August's microscopically expansionary 50.2, though the market is braced for an even weaker number. ECONCN
Analysts at ANZ suspect the index could drop to 49.8.
"The pace of momentum is slowing in China, with August industrial production growth at its lowest level since the global financial crisis, with the weak property market weighing on fixed asset investment," they said in a note.
"The one bright spot is likely to be the improving external demand environment, which should help lift the new orders and new export orders sub-indexes."
Among regional markets, Australia's main index .AXJO eased 0.2 percent while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.16 percent.
A holiday in Japan made for thin conditions and could lead to whippy moves in prices.
On Wall Street the Dow .DJI fell 0.62 percent, while the S&P 500 .SPX lost 0.8 percent and the Nasdaq .IXIC 1.14 percent. European shares .FTEU3 ended down 0.6 percent.
The drop in the S&P was the biggest one-day decline since early August and was caused in part by a soft reading on U.S. existing home sales which hit shares in building companies.
US DOLLAR IN DEMAND
The soggy data gave a fillip to Treasuries, as did comments from New York Federal Reserve bank president William Dudley that there still excessive slack in the economy so any increase in rates should be done cautiously.
Dudley played down the importance of the various interest rate projections of Fed members released last week which some in the market had taken as a signal of a hawkish turn.
That helped yields on two-year paper US2YT=RR ease back to 0.553 percent and away from a top of 0.597 hit last week.
Yields on 10-year Treasury notes US10YT=RR dipped to 2.56 percent, from 2.59 percent late Friday.
Dudley also said the steady rise in the dollar could complicate the Fed's job, potentially hurting U.S. economic performance and pushing down inflation.
The currency has been on a tear recently thanks to the diverging outlook for U.S. rates and those in Europe and Japan, where policy is set to remain super-easy and might even be loosened further.
Measured against a basket of currencies .DXY the dollar had climbed for 10 weeks straight, the longest streak since the index was created in 1971.
On Tuesday, the dollar was taking a breather at 108.77 yen JPY= after peaking at a six-year high of 109.46 last week. The euro EUR= was hanging on at $1.2849 having been at its lowest since July last year at $1.2814.
The concerns over China and weakness in commodity prices took a heavy toll on the Australian dollar which slid to a seven-month low of $0.8854 AUD=. China is Australia's single biggest export market and investors often use the currency as a liquid proxy for China plays.
Among the many commodities under fire, gold touched its lowest since January at $1,208.36 an ounce before steadying at $1,214.80 XAU=. Silver XAG= hit $17.30 an ounce, its lowest since June 2010.
Brent crude oil for November delivery LCOc1 edged up 4 cents to 97.01 a barrel, having fallen sharply overnight to be uncomfortably close to its recent trough of $96.21.
Ample supply and slowing economic growth in Europe and China have so far outweighed expectations of a cut in oil output from the Organization of the Petroleum Exporting Countries (OPEC). U.S. crude CLc1 bounced 10 cents to $90.97 a barrel.
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