(Reuters) – The dollar and global shares recovered from one-month lows on Tuesday and German Bund futures eased, after weak U.S. data calmed concerns about an early cut in central bank stimulus.
The dollar rose above 100 yen and its index .DXY clawed back some of the 1 percent fall seen on Monday after the Institute for Supply Management's (ISM) index of U.S. factory activity fell to 49.0, its lowest since June 2009.
European stocks .FTEU3.STOXX50E were 0.6 percent higher, tracking an overnight rebound in U.S. and Asian shares and looking to snap a two-day losing streak that has left them at their lowest level since early May, reports Reuters.
The disappointing ISM data bolstered the view that it is still too early for the Federal Reserve to start winding down its support program. Nevertheless with such talk unlikely to go away, analysts saw recent large market swings continuing.
"Were are into this very volatile period which we were always going to have after such expansionary monetary policy," said National Australia Bank strategist Gavin Friend.
"Markets, in typical forward-looking fashion, are seeing the tapering as the beginning of the end of QE. You can argue that the Fed will still be buying significant quantities of bonds so markets shouldn't really react, but it is about the direction of travel."
As risk assets rebounded and investors kept positions tight ahead of the European Central Bank and Bank of England monthly meetings on Thursday and U.S. jobs data on Friday, German Bund futures dipped and peripheral euro zone debt edged up.
Commodity markets were also steadier. Copper climbed for a second session, while gold and oil were both little changed at $1,405 an ounce and $102 a barrel respectively.