World stocks stumbled to three-week lows on Thursday and developed market bond yields dipped, after Chinese data showed a sharp decline in exports, reviving concerns about the health of the world's second-biggest economy.
Riskier assets have had a difficult few weeks, undermined by concerns about a potential rise in U.S. interest rates, the outcome of U.S. elections, Britain's departure from the EU and the health of German and Italian banks.
Asia's markets suffered falls overnight after data showed Chinese imports in dollar terms were back in contractionary territory in September, while exports dropped by a sharper-than-expected 10 percent.
Europe opened with a thud too, with falls of 0.7-1.3 percent for Britain's FTSE, Germany's DAX and France's CAC pulling the pan-regional STOXX 600 down for a third day running and the sixth day in the last seven.
"We have got a stronger dollar and that is the market now pricing in the likelihood of a December U.S fed rate hike," said Rabobank currency strategist Jane Foley.
"The other theme is the weakness of Chinese exports. That does help turn the spotlight on the recent weakness of the yuan. Then of course there is sterling."
Bets on a Federal Reserve move remained broadly unchanged after minutes from the U.S. central bank's last meeting had shown policymakers still grappling over timing, but on balance inching closer to a hike.
The minutes said "it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation."
It was just enough uncertainty to pull the dollar off a 2-1/2-month high versus the yen - it traded at 103.80 yen - and push ten-year yields on U.S. government debt down 5 basis points to 1.74 percent, a relatively large move out of U.S. hours.
There was no such reprieve for Britain's pound as it fell to $1.2150 and to 90.5 pence per euro, extending a slump of 15 percent or more since the UK's June vote to leave the EU.
The impact of the plunge was starting to show beyond the market too, as the UK's largest supermarket Tesco started taking some of the products from one of its biggest suppliers Unilever off its shelves after refusing to accept a 10 percent price hike.
The spat sent both firms' shares down 2.3 percent. "Clearly Unilever won't be the only company wanting to pass on a 10 percent or similar price increase due to the fall in the pound," Rabobank's Foley added.
The euro dropped under $1.10 for the first time in almost three months as the dollar pressure was compounded by a Reuters report that the ECB was considering a number of changes to its 1.5 trillion euro bond buying programme.
Sources at the central bank said options included occasionally buying bonds with yields lower than its -0.4 deposit rate and occasionally deviating away from rules on which countries' bonds it buys.
The poor batch of Chinese trade numbers sent the offshore version of the country's yuan close to lows last reached in a dramatic sell-off in January and to a six-year trough in the tightly controlled onshore market.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, touching its lowest since Sept. 19. Hong Kong stocks fell 1.2 percent and Japanese shares were down 0.4 percent thanks to a stronger yen.
"The China data has exacerbated the broad cautious mood and we should see more gains for the yen and other safe-haven assets," said a currency trader at an Asian bank in Hong Kong.
The CBOE Volatility Index, the "fear gauge" of near-term investor anxiety, held around 16, indicating broader market uncertainty.
Within Asia, the Thai baht was also in focus after falling to an eight-month low in the previous session on concerns about the health of 88-year-old King Bhumibol Adulyadej. The health of the world's longest reigning monarch has "overall not yet stabilised", the palace said on Wednesday.
Oil prices struggled following a 1 percent drop overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over a pledge to restrict output.
U.S. West Texas Intermediate crude slipped 0.8 percent to trade at $49.78 a barrel.
Copper and other industrial metals were flushed lower by the China jitters, while safe-haven gold edged up to $1,257 an ounce following a 6 percent slump over the last three weeks.
($1 = 0.8928 euros)