NEW YORK: Stock markets fell yesterday as investors waited for progress in approving aid for Greece and in averting potential US fiscal constraint in early 2013.
The euro, meanwhile, gained against both the dollar and the yen. Elections in Japan are set for next month, and the main opposition party favors further monetary easing.
In the United States stock indexes fell despite strong earnings reported by technology bellwether Cisco and two retail chains.
Investors are wary of the impact tax hikes and severe spending cuts would have on the US economy if President Barack Obama and Congress fail to agree on a plan to avoid the so-called fiscal cliff.
Though Greece is expected to secure short-term funding to meet its debt obligations, international lenders disagree over how Athens can cut its borrowing to more sustainable levels. A deal to release aid payments remains a way off.
The Dow Jones Industrial Average was down 60.96 points, or 0.48 percent, at 12,695.22. The Standard & Poor's 500 Index was down 5.96 points, or 0.43 percent, at 1,368.57. The Nasdaq Composite Index was down 6.16 points, or 0.21 percent, at 2,877.73.
The MSCI world equity index fell 0.7 percent to 319.89 after five days of losses. Markets across Europe fell, but Asian markets recovered from seven-week lows. London's FTSE 100, Frankfurt's DAX and Paris's CAC-40 were between 0.4 and 0.6 percent lower.
The euro meanwhile gained against both the dollar and the yen after Japanese Prime Minister Yoshihiko Noda said he was set to dissolve parliament's lower house on Friday for a snap election next month, which is likely to cost him his job,
The dollar rose 0.9 percent to 80.12 yen and the euro climbed 1.2 percent on the day to 102.10 yen. Against the dollar, the euro was 0.25 percent higher at $1.2730.
In oil markets Brent crude reversed early losses to gain $1.34 to $109.60 a barrel, supported by the dollar's fall against a basket of currencies, aside from the yen, which makes dollar-denominated oil more affordable.
US oil gained 87 cents to $85.25, snapping two days of losses.