European stocks erased losses but still recorded their largest monthly decline in August since May. Continued demand for safe-haven assets pushed the yen to a near 15-year peak and gold prices to a two-month high.

While US stocks rose modestly, investors worried about the outlook after recent disappointing economic reports.

The Dow Jones Industrial Average rose 42.61 points, or 0.43 percent, to 10,052.34, while the Standard & Poor's 500 Index climbed 3.79 points, or 0.36 percent, to 1,052.71. The Nasdaq Composite Index was up 3.68 points, or 0.17 percent, at 2,123.65.

The MSCI All-Country World equity index trimmed losses but remained 0.16 percent lower.

The FTSEurofirst 300 index of top European shares eked out a gain of 0.08 percent after falling as much as 1.3 percent on Tuesday. It fell around 2 percent for the month.

In Tokyo, the benchmark Nikkei shed 325.20 points to 8,824.06, its lowest finish since April 28, while the broader Topix lost 3 percent to 804.67.

The yen on Tuesday neared a 15-year high against the dollar and was headed for its fourth monthly rise as the US economic concerns boosted the safe-haven appeal of the Japanese currency.

The strengthening of the yen came despite Japan's decision to expand cheap loans to banks, a symbolic monetary easing move seen as a sign that authorities may act further to stop the currency appreciation.

"The policy action by the BoJ isn't going to change the market's mood. It would probably take intervention to shake things up a bit," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

Around midday New York trade, the dollar was down 0.58 percent against the yen at 84.11. It had earlier fallen to 84.06, according to Reuters data, not far from its 15-year low of 83.58 set on electronic trading platform EBS last week.

The euro was up 0.32 percent at $1.2703.

The dollar was also down 0.24 percent against a basket of major currencies measured by the US Dollar Index.

US Treasury prices gave back some of their earlier gains but remained higher in a sign that investors are skeptical of the US economic outlook.

The benchmark 10-year US Treasury note was up 13/32 in price, with the yield at 2.4842 percent. The 30-year bond rose 22/32, with the yield at 3.544 percent.

US crude oil prices fell $1.56, or 2.09 percent, to $73.14 per barrel, while spot gold prices $10.35, or 0.84 percent, to $1,246.60, their highest since late June.