In Europe, Germany's DAX was down 0.5 percent at 12,704 while the CAC 40 in France fell 0.7 percent to 5,261. Japan's Nikkei 225 rose 0.4 percent, while South Korea's Kospi added 0.1 percent.
KEEPING SCORE: Hong Kong's Hang Seng led declines, falling as much as 0.7 percent.
EURO SPIKES: That's certainly the conclusion in the currency markets, where the euro surged 0.9 percent to $1.1277.
San Francisco Fed President John Williams said on Monday that a recent slowdown in US inflation was mainly due to one-off factors and should not prevent further increases in rates.Financial conditions have loosened in the past year despite the Fed raising interest rates three times since December, which is another reason to continue tightening, New York Fed President William Dudley said in remarks published on Monday.The euro licked its wounds after contrastingly dovish comments from European Central Bank President Mario Draghi.
YELLEN'S TURN: How the euro ends the day could hinge on comments later from Federal Reserve Chair Janet Yellen, who is due to address an audience in London on a host of global matters. Market watchers also noted that she didn't say anything to contradict earlier statements about plans to gradually remove stimulus and raise rates if economic conditions continue to improve, indicating those plans are still on track. Reports on Wednesday, however, said that Draghi meant to signal tolerance for a period of weaker inflation, not an imminent policy tightening, according to sources familiar with his thinking. A stronger euro can hurt shares of European exporters since it can make their products more expensive for clients overseas to purchase.
On Wall Street, bank stocks helped limit losses in technology shares, which extended after the healthcare vote delay. The dollar touched a more than seven-month trough against the Swiss franc of 0.9593 franc. It was spooked after the U.S. Senate delayed voting on a healthcare reform bill, rekindling worries about the timeline of Donald Trump's business-friendly policies. The Nasdaq composite lost 19 points, or 0.3 percent, to 6,227.
The currency is now up nearly 10 per cent this year.
Brent crude futures, the global benchmark for oil prices, gained 82 cents, or 1.79 percent, to settle at $46.65 per barrel.
Tim Evans, Citi Futures' energy futures specialist, said in a note that oil's move was "a technical correction after the declines of the past five weeks" helped along by boosts from a weaker dollar and forecasts for a weekly draw in US crude inventories. The common currency has gained 1.4 percent this week.
"There's a vulnerable political and vulnerable economic backdrop (for the UK) and you layer on the more constructive attitude with respect to politics and economics in the euro zone and therefore we get euro sterling trending higher", said Rabobank strategist Jane Foley. And on Tuesday it hit 112.08 yen, its highest since mid-May.