Currencies perceived as safe harbors such as the yen and Swiss franc rose and gold hit a seven-weeks high, as weak economic growth around the world spurred talk of deflation.
US stocks managed to rise as investors put aside worries about the economy to take advantage of beaten-down prices.
The Dow Jones Industrial Average was up 7.95 points, or 0.08 percent, at 10,311.10. The Standard & Poor's 500 Index was up 1.09 points, or 0.10 percent, at 1,080.34. The Nasdaq Composite Index was up 14.17 points, or 0.65 percent, at 2,187.65.
The pan-European stocks FTSEurofirst 300 index closed down 0.01 percent. World stocks measured by the MSCI All-Country World Index were up 0.3 percent after falling for four days in a row. The Thomson Reuters global stock index gained 0.41 percent.
Japan's Nikkei fell 0.6 percent, recovering from an early drop of as much as 1.7 percent after gross domestic product grew just 0.1 percent in the second quarter, compared with forecasts of 0.6 percent.
The fall in Treasury yields has been a big factor weighing on the US currency against the yen because of the recent high correlation between dollar/yen and Treasury yields.
The benchmark 10-year US Treasury note was up 22/32, with the yield at 2.6 percent, hitting a 17-month low.
The 30-year US Treasury bond was trading 2 points higher in price, with the yield at 3.75 percent, down from 3.86 percent at Friday's close and a 16-month low.
The two-year US Treasury note was up 2/32, its yield at 0.5 percent.
The Swiss franc and the Japanese yen, both used to fund leveraged carry trades, are typically sought in times of market stress.
Against the Japanese yen, the dollar was down 1.03 percent at 85.30 from a previous session close of 86.190.
The dollar fell 1.2 percent to 1.0375 francs after hitting its lowest since Aug. 6. The euro was 0.5 percent lower against the Swiss franc at 1.3335, having earlier dropped to its lowest since July 8.
However, the euro was up 0.69 percent at $1.2838 from a previous session close of $1.2750.
In the commodity market, gold rose to its highest level since early July, as the gloomy Japanese economic data stoked investor concern about the pace of global economic recovery.
Spot gold rose 0.85 percent to $1,223.90 an ounce after hitting an intraday day high of $1,227.15 - its highest since July 1. Bullion struck a record high around $1,264 in June.
Copper advanced 1 percent, helped by lower inventories and a weaker dollar, and crude oil prices fell 0.2 percent at $75.24.
