Fresh trade worries and uncertainty about the Federal Reserve's plans for cutting interest rates weighed on Asian markets Wednesday while fears of a hard Brexit kept the pound wallowing at more than two-year lows.
Oil prices were also struggling owing to questions about the outlook for the global economy, the China-US tariffs stand-off and a stronger dollar.
After last week's optimism sparked by Fed boss Jerome Powell's nod to a cut in rates, investors were taking a more sober view after a number of positive readings on the US economy including on retail sales.
The readings -- while coming alongside figures showing a drop in the manufacturing sector -- revived worries that the Fed will only make one small reduction in borrowing costs this month, and possibly not make any more this year.
The possibility of rates staying slightly elevated boosted the dollar against the yen, euro and pound on Tuesday and held up in early trade Wednesday.
The pound was taking another hiding with the possibility of a no-deal Brexit growing ever more likely as the two contenders to become prime minister slug it out by trying to take increasingly tough lines with the EU. Sterling is now at its lowest level since April 2017.
The dollar also climbed against most higher-yielding, riskier currencies, jumping 0.8 percent against the Mexican peso, 0.3 percent on the Australian dollar and 0.2 percent versus South Korea's won.
Regional equity markets were also in the red, with confidence jolted by comments from Donald Trump that revived trade tensions with China.
- 'Fragile and uneasy' -
Hong Kong, Shanghai and Tokyo were all well down in the morning, while there were also losses in Singapore and Taipei with Seoul off more than one percent as South Korea's trade stand-off with Japan drags on.
Sydney and Manila were slightly higher.
The president said the two sides were still a long way from a trade deal and that he still could impose higher tariffs on Chinese imports if he did not get his way.
His remarks, hitting out at what he says is a lack of follow-through from Beijing on promises to buy more farm goods, came just as high-level talks were due to take place this week, though a face-to-face has still not been agreed.
There had been hopes of some sort of progress after Trump and Xi Jinping agreed at the G20 last month to restart talks.
"President Trump reminded investors just how fragile and uneasy the post-G20 trade war truce" is, said Stephen Innes at Vanguard Markets. "It seems we are in this neverending cycle of one step forward and two steps back."
And Tapas Strickland, senior analyst at National Australia Bank, said there were "no signs that tensions will abate anytime soon".
"China's commerce minister, who is part of the trade negotiations, implied China is preparing for a protracted trade spat and is in no hurry to reach a deal at the expense of losing face," he said in a note.
On oil markets, both main contracts struggled to recover after tumbling Tuesday more than three percent as the trade row returned, the dollar rose and tensions between the US and Iran appeared to be easing.
US Secretary of State Mike Pompeo said Tehran was open to talks if Washington eased sanctions preventing it from selling oil, which is crippling the islamic state's economy.
The developments were the first sign of an easing in the stand-off that has raised worries of a conflagration in the tinderbox Middle East.
- Key figures around 0300 GMT -
Tokyo - Nikkei 225: DOWN 0.4 percent at 21,448.18 (break)
Hong Kong - Hang Seng: DOWN 0.5 percent at 28,479.60
Shanghai - Composite: DOWN 0.2 percent at 2,931.93
Pound/dollar: DOWN at $1.2414 from $1.2408 at 2040 GMT
Euro/pound: UP at 90.33 pence from 90.32 pence
Euro/dollar: DOWN at $1.1209 from $1.1211
Dollar/yen: DOWN at 108.17 yen from 108.26 yen
West Texas Intermediate: UP six cents at $57.68 per barrel
Brent North Sea crude: UP 20 cents at $64.55 per barrel
New York - Dow: DOWN 0.1 percent at 27,335.63 (close)
London - FTSE 100: UP 0.6 percent at 7,577.20 (close)