Global shares struggled on Wednesday as markets added to bets on an early US rate hike while nagging concerns over Scotland's future unnerved investors in Europe, hurting sterling and helping the dollar hold on to recent gains.
European stocks flirted with their fourth daily decline in a row and benchmark US Treasury yields rose for the fifth straight session, something not seen since early June.
Shares in the euro zone's biggest bank Santander fell as much as 2 percent, lagging the euro zone and pan-European financials indices, after the sudden death of its 79-year old chairman Emilio Botin, Reuters reported.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3 percent, its largest fall in nearly six months.
At mid-session the FTSEurofirst index of leading European shares was down 0.1 percent at 1384 points. Germany's DAX was down 0.1 percent, France's CAC 40 was flat and Britain's FTSE 100 up 0.1 percent.
Stock markets' struggles on Wednesday followed broad weakness on Wall Street the previous day after initial excitement over Apple Inc's new products evaporated, and as bond yields continued their march higher.
The 10-year US yield scaled 2.5 percent, lifting European yields, as investors continued to digest a study earlier this week by the San Francisco Fed that showed investors expect slower rate hikes than policymakers themselves expect.
Germany's 10-year yield rose back above 1 percent to 1.02 percent, its highest in a month, and Spain's rose 10 basis points to 2.29 percent.
"The study by the San Francisco Fed unnerved investors that markets are too complacent about the pace of Fed rate hikes," said Nick Stamenkovic, bond strategist at RIA Capital Markets. "It is only a matter of time before the Fed moves for tighter policy."
Scottish Poll Jitters
The euro recovered from Tuesday's 14-month low of $1.2860 back to $1.2943, and sterling hit a 10-month low of $1.6052 before recovering almost a cent.
But with latest official polls suggesting the outcome of the Scottish independence referendum is now too close to call, the "risk premium" surrounding the possibility the 300 year-old United Kingdom could cease to exist next week continues to hang over British financial assets.
The brief sterling dip followed an unverified web poll by an independent blogger that showed the pro-independence camp leading with 53.9 percent.
On Tuesday, Bank of England governor Mark Carney said Scotland could not be fully independent and have a currency union with the rest of the UK, warning that currency union is "incompatible with sovereignty".
Gold recovered from Tuesday's three-month low of $1,247.15 per ounce to stand at $1,254.10.
