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The dollar edged down and global shares slipped to a two-week low on Friday as investors turned cautious before a keynote speech by Federal Reserve Chair Janet Yellen that could map out a clearer path for U.S. interest rates.
The MSCI All-Country World index was down 0.1 percent by 0817 GMT, after slipping to its lowest level since Aug. 9, while the pan-European STOXX 600 fell 0.2 percent.
Investors were wary of Yellen hinting at a near-term interest rate hike, which could divert some of the liquidity that has underpinned riskier assets worldwide, though others predicted she would strike a more equivocal note.
The dollar index , which tracks the currency against six major peers, slipped 0.14 percent to 94.721, while euro zone government bond yields crept up.
Recent hawkish comments from other Fed officials have raised expectations of a U.S. rate hike this year, though markets are not fully pricing one in till 2017.
"Markets are a bit worried about the upcoming comments from Yellen, which is understandable given how much of the market strength is due to central bank action," said Philippe Gijsels, head of research at BNP Paribas Fortis in Brussels.
"The fact that some of her disciples have indicated that it may be time to raise rates again has not done much in terms of calming sentiment. She will probably try to strike a balance between an improving U.S. economy and risks abroad."
Chris Scicluna, head of economic research at Daiwa Capital Markets, took a similar line.
"Yellen won't be able to ignore the current debate but she can't make a commitment either because there's a range of views on the FOMC," he said.
On Thursday San Francisco Fed President John Williams and Kansas City Fed President Esther George defended the need to raise rates, albeit gradually, to keep the U.S. economy from overheating.