A persistent sell-off in bond markets left financial market confidence in short supply on Thursday, with stocks lower globally and not even traditional safe havens like gold and the Swiss franc providing much of a refuge.
German 10-year Bund yields DE10YT=TWEB, the .benchmark for European debt costs, rose to 2015 highs, dragging down the region's share markets <0#.INDEXE> in the process on fears the higher borrowing costs could hurt economic growth and profits.
Currency traders watched the euro EUR= burn past $1.13 to a five-month high as the dollar lost its overnight swagger.
That took the euro's surge over the last two days past 3 percent and with 10-year Bund yields testing 1 percent, market players had Wednesday's remarks from European Central Bank head Mario Draghi that volatility was here to stay, ringing in their ears.
"Clearly these are very aggressive moves," said Patrick O'Donnell, an investment manager at Aberdeen Asset Management in London
"Momentum is clearly with the (bond market) bears at the moment and there was nothing said by ... Draghi yesterday that would stop this rout."
After a 4 percent jump on Wednesday, Greek shares .ATG fell 2.5 percent as uncertainty clouded the country's hopes of clinching an aid deal with euro zone creditors in the coming days.
Greek Prime Minister Alexis Tsipras left talks with senior EU officials in Brussels on Wednesday saying a deal was "within sight" and that Athens would make a payment due to the IMF on Friday.
But Deputy Shipping Minister Thodoris Dritsas said on Thursday saying it would not "surrender" to the demands of its creditors. "What appears to have been ...proposed (by the EU executive)... is beneath expectations in every way," he said.
EMERGING STRAINS
With global risk appetite waning, emerging markets were back under pressure.
Indonesia's central bank said it was ready to intervene to support the rupiah IDR= after the currency dropped to a 17-year low against the dollar.
China's high-flying CSI300 .CSI300 and Shanghai Composite Indexes .SSEC staged impressive late recoveries to end 0.7 percent higher having been as much as 3.5 percent in the red at one point.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ended 1 percent lower though as Australian shares lost 1.3 percent in a fourth straight day of losses, while Japan's Nikkei .N225 ended flat.
U.S. Treasury yields rose in tandem with their European counterparts and the dollar's fresh slip against the euro left it also flat against other majors like the yen, sterling and the Swiss franc.
In commodities, crude oil struggled after sliding overnight on concerns generated by a big build-up in distillates and with OPEC expected to reject output cuts at its meeting on Friday.
Brent crude LCOc1 fell 0.7 percent to $63.34 a barrel after plunging 2.6 percent the previous day, while traditional safe haven gold XAU= sagged to $1,183 an ounce.
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