Rising expectations that the United States will raise interest rates in December for the first time in nine years dominated world financial markets Monday, boosting the dollar while capping gains for stocks.
A forecast-busting surge in US jobs last month, revealed in official data on Friday, sent the dollar soaring against the euro and emerging market currencies as traders banked on a US rate rise next month.
European stock markets were mostly lower in morning deals as brokers pondered the impact of higher US rates. Though London's FTSE crept up 0.1 percent, Frankfurt's DAX 30 eased 0.3 percent and Paris' CAC 40 dropped 0.5 percent.
Stock markets across in Asia had a fairly solid showing despite further weak trade data out of China.
"European equities are trading little changed to slightly lower... in the aftermath of much better than expected US non-farm payroll (unemployment) data last Friday, which pretty much made it a given that a US rate hike will take place after all in 2015," said Markus Huber, senior analyst at broker Peregrine & Black.
Financial markets have for months speculated about when the US Federal Reserve will start to raise interest rates from record-low levels.
The likelihood of an increase in December has lifted the dollar in anticipation of higher returns for those investing in the US currency.
In Asian trading hours Monday, the European single currency slumped to $1.0707 -- the lowest level since the end of April. It later rebounded in European deals.
The US Labor Department on Friday said that the world's biggest economy created 271,000 net new jobs in October, almost twice as many as September, while the unemployment rate fell to a seven-and-a-half year low of 5.0 percent.
The figure easily outstripped expectations and tempered fears that a slowdown in the world economy, particularly in China, had spread to the United States.
Following a "frantic" market reaction to the US unemployment data on Friday, "things quieten down a bit this Monday with little concrete data for investors to chew over," said Connor Campbell, analyst at Spreadex trading group.
"That unfortunately leaves the markets free to speculate over the impending US rate hike, with 70 percent of analysts now expecting the unwanted Christmas present of a December lift-off."
Federal Reserve chief Janet Yellen earlier this year said she expected a rise before 2016, albeit incremental, as the US economy gets back on track.
The situation is less bright in China, the world's second biggest economy after the United States.
Official data Sunday showed that China recorded its highest trade surplus on record last month, as plunging imports highlighted the country's continued struggle to boost domestic demand and prop up sagging growth.
As the planet's biggest trader in goods and a key driver of already subdued world growth, the figures will also add to signs the global economy is facing its toughest year since the height of the financial crisis.
The OECD on Monday cut its forecast for global growth to 2.9 percent this year and 3.3 percent in 2016, saying subdued inflation should support a gradual pick up in the world economy.
However, the OECD's chief economist called "deeply concerning" a stagnation in global trade that has in the past "been associated with global recession".
The key figures around 1030 GMT
London - FTSE 100: UP 0.1 percent at 6,360.48 points
Frankfurt - DAX 30: DOWN 0.3 percent at 10,956.10
Paris - CAC 40: DOWN 0.5 percent at 4,957.46
Tokyo - Nikkei 225: UP 2.0 percent at 19,642.74 (close)
EURO STOXX 50: DOWN 0.4 percent at 3,454.06
Euro/dollar: UP to $1.0773 from $1.0742 in late US trade Friday