European shares extended their losses today as market sentiment remain jittery over inflation fears and the possibility of human-to-human transmission of bird flu in Indonesia.
The dollar extended its fall after data showed new orders for US-made durable goods fell an unexpected 4.8 per cent in April.
The 10-year US Treasury note yield fell to a one-month low below 4.99 percent on the weak numbers while US stock futures gained to indicate an opening rise on Wall Street, which turned lower in the last half hour of trading yesterday.
Markets were affected earlier by the World Health Organisation (WHO) when it said limited human-to-human transmission of bird flu may have occurred in Indonesia family although there was no evidence it had mutated to allow it to pass easily among people.
Europe 's FTSEurofirst 300 index of top shares was 1.5 percent weaker at 1,282.9 points. It has now fallen almost 9 percent from a near-five year high of 1,407.52 hit on May 11.
"If you are an optimist you will call it a correction or profit-taking. If you are a pessimist, you will call it panic selling," said Richard Segal, chief strategist of London-based Argo fund management group.
The index had rebounded strongly yesterday to post its biggest one-day points rise since March 2003 with miners jumping as commodity prices rebounded after their recent drop.
However, mining stocks were shaky, eventually sinking as copper lost 7 percent after its record 11 percent gain on Tuesday and gold fell 2.5 percent to $655.00 an ounce.
Germany's Ifo May business climate index came in at 105.6, above the consensus forecast of 105. Many in the markets had expected a sharp decline in confidence after data yesterday showed a sharp fall in Belgian business confidence.
The euro rose to $1.2870 following the Ifo and durable goods reports.
The June Bund future was volatile, rising in opening trade on the bird flu scare before retreating after the Ifo numbers and then rising again to 116.95, its highest since early April, as stocks fell further.
Oil majors such as BP slipped as crude dipped back below $71 a barrel ahead of weekly US oil inventory data which is expected to show a build in stocks .
There was some good news for equities with Japan's Nikkei average posting its biggest one-day percentage gain in more than two months, rising 1.97 percent as investors bet stock prices had fallen too far.