European shares fell and the dollar and bond yields paused near multi-month highs on Tuesday as traders returned from a four-day break to a rash of company takeovers and a cautious air ahead of Friday's U.S. jobs data.
Crude oil's drop below $54 a barrel was a double-edged sword.
It dragged on heavily-weighted oil stocks like BP (London:BP.L - News) and Repsol YPF (Madrid:REP.MC - News) while capping losses elsewhere by relieving company profit margins and the market's growing inflation itch.
"The question is whether the market will continue to worry about inflationary pressures," said Bert Jansen, European equity strategist at Exane BNP Paribas in Paris.
There was little fallout from Asia as fears of another tsunami proved unfounded after a huge earthquake off Sumatra, although shares fell in the wake of weak Japanese jobs and retail sales data and disappointing results from China Unicom, dealers said.
The FTSEurofirst 300 index of leading European shares eased 0.32 percent after Japan's Nikkei average sank 1.63 percent -- its biggest daily drop in four months.
U.S. stock index futures indicated a weak opening on Wall Street, which starts trading an hour later than usual relative to Europe after European clocks moved forward over the weekend.
TeliaSonera led the blue-chip winners in Europe, surging more than 5 percent.
That was after the Nordic region's biggest telecom operator said it was set to become the majority shareholder in Turkish mobile phone group Turkcell, radically transforming its growth prospects.