Caution prevailed across major markets on Wednesday before a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping this week, although metals and oil prices firmed on a hope of better global demand.
The release of minutes from the last U.S. Federal Reserve meeting, in which it decided to raise interest rates, will be keenly watched by market participants for any signs of a formal discussion on reducing the size of the bank's balance sheet.
Overnight, Richmond Federal Reserve President Jeffrey Lacker abruptly left the U.S. central bank after admitting that a conversation he had with a Wall Street analyst in 2012 may have disclosed confidential information about Fed policy options.
The dollar lost its grip on earlier gains as concerns over a North Korean missile test worsened sentiment ahead of the summit between the U.S. and Chinese leaders.
The dollar index, which tracks the U.S. currency against a trade-weighted basket of six peers, was slightly weaker on the day, as slumping U.S. Treasury yields also gave investors little incentive to buy dollars.
Topping the agenda at Trump's Mar-a-Lago resort in Florida will be whether he makes good on his threat to use U.S.-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbor North Korea, which is working to develop missiles capable of hitting the United States.
Stock futures on the financial market were little changed.
"The meetings are expected to be informal, unscripted discussions of how the two countries will address, but not immediately resolve, their differences," said strategists at Morgan Stanley in a note to clients.
"Any commentary on how the U.S. specifically wants to try to reduce the trade deficit with China will be watched by FX investors," the strategists wrote.
European stocks were little changed on the day as the cautious start to the second quarter continued. Oil and mining-related stocks were outperformers, lured higher by firmer commodities prices.
Easing concerns over France's upcoming presidential election put the brakes on a fall in euro zone government bond yields. For a FACTBOX on top broker views on the election see:
Oil climbed to a near one-month high on signs of a gradual tightening in global oil inventories and on concern about a supply outage at a field in the United Kingdom's North Sea that feeds into an international benchmark price.
Brent crude futures, the international benchmark for oil, were up 1 % at $54.73 per barrel. U.S. West Texas Intermediate (WTI) crude futures were also up 1 %.
London copper rallied as Chinese traders returned from a two-day break to buy up metals following brighter global manufacturing reports. Zinc and nickel tracked a rally in steel.
Safe-haven gold, which has benefited from move away from risky assets this week, faltered at a key technical resistance level. Spot gold gave up earlier gains to trade down 0.2 % after failing to cross above its 200-day moving average.
In emerging markets, the South African rand came under renewed pressure, revisiting the sell-off triggered by political turmoil and a ratings downgrade.
Inan Demir, senior emerging market economist at Nomura, said there was room for further weakness in South African assets, with Zuma's position not as weak as had been perceived.
"He is still in a strong position to stay in place and implement his policies ... and these policies are likely to lead to further credit downgrades and further weakness in the rand," he said.
Shares of top South Africa-exposed asset management firms listed in the UK, Investec PLC and Old Mutual, have lost more than 10 % over the past week, on worries over the impact of politics on investor flows.