Stocks see-sawed with solid gains in China and other Asian markets offset by a tumble in Japan then a red start for most of Europe's bourses.
The fight between Goldilocks bets - on the not too hot, not too cold global economy - and market bears who have delivered some hefty blows in recent weeks, has continued with little sign yet of a clear winner.
Stocks see-sawed with solid gains in China and other Asian emerging markets on Tuesday offset by a tumble in Japan and then a red start for most of Europe's bourses and Wall Street futures in New York.
Tokyo's 0.65 per cent fall had been compounded as the yen hit a five-month high amid a renewed bout of dollar weakness which had also helped lift bond and commodity markets after recent turbulence.
Copper, one of industrial metals seen as a sensitive gauge of global economic health, climbed over 1.3 per cent, while Asia's overnight gains kept MSCI's 47-country world stocks index up 0.2 per cent despite Europe's subdued start.
"As long as we don't get dragged into (a US) recession the market tends to recover quite quickly," said Donough Kilmurray, Managing Director, Investment Strategy Group at Goldman Sachs, seeing only a 10 per cent chance of that this year.
Still, caution lingered in the broader markets following the US-led tumble in riskier assets last week and ahead of US inflation data on Wednesday. A stronger-than-expected reading on price pressures could trigger a fresh wave of selling.
World markets' main 'fear gauge', the VIX volatility index was nudging higher again after two days of easing back.
The currency market remained choppy too.
Britain's pound was briefly jolted to a session high of $US1.3924 after headline annual UK inflation came in at 3.0 per cent, a tenth of a point above forecasts and holding close to its highest level in nearly six years.
The data highlighted the challenge the Bank of England faces as it tries to return price growth to target over the next two years.
The US dollar's index against a basket of six major currencies fell over 0.4 per cent to 89.923 as the bears returned. Last week had been the greenback's best since 2016.
It was 0.3 per cent lower at 108.285 yen, while the euro added 0.2 per cent to $US1.2322 and the Swiss franc also made ground.
"The (US) consumer prices numbers (on Wednesday) bear close watching as if it shows a strong rise, that could rattle US long-term yields," and currencies and stocks said Koji Fukaya, president of FPG Securities in Tokyo.
The 10-year Treasury note yield - which moves inverse to its price - fell back under 2.83 per cent in Europe trading after rising to a four-year peak of 2.902 per cent on Monday.
German bonds were also back in demand as recent multi-year highs on yields on both sides of the Atlantic proved attractive for some investors.
Germany's 10-year yield fell by almost 2 basis points to 0.73 as it retreated further from the 2-1/2 year high of 0.81 per cent hit last week.
"I think what we are seeing is a little bit of a consolidation," said DZ Bank strategist Christian Lenk. "Given the pace of the move so far, we had to take a break somewhere and we have reached that region now."
South Africa's rand fell 0.25 per cent to 11.92 per dollar following news that the country's ruling party African National Congress had opted to sack President Jacob Zuma.
The rand had risen 2 per cent over the past two days, helped by hopes that Zuma would step down, but ran into resistance as the latest news was seen potentially prolonging a political standoff.
Other commodity-sensitive currencies fared better. The Australian dollar was steady at $US0.7866 after rising about 0.6 per cent overnight on the back of higher commodity prices and improvement in broader risk sentiment.
Copper prices on the London Metal Exchange extended an overnight rally to trade 1.4 per cent higher at $US6,927.00 per tonne.
Brent crude rose 0.55 per cent to $US62.94 per barrel while gold was 0.3 per cent higher at $US1.326.51 an ounce.