Investors turned cautious on Friday about what a stronger dollar and weak commodity prices could mean for the world economy, as a clutch of central banks moved to cushion the impact of the first U.S. rate rise in nearly a decade.
Initial relief after the U.S. Federal Reserve enacted a long-expected hike on Wednesday started to fade, as falls in global stocks and emerging markets showed that the move might not pass off as smoothly as hoped.
The dollar sagged slightly on Friday but remained on track to record its strongest week since early November. .DXY
European shares fell back from a one-week high reached in the previous session, taking their cue from earlier slips in Asia and on Wall Street, as oil prices headed for their third consecutive week of losses.
The pan-European FTSEurofirst 300 index .FTEU3, which had risen 1.3 percent on Thursday, fell 0.6 percent.
"I am still quite bearish about the prospects for the first quarter of next year. The oil price problems are not going away any time soon," said Terry Torrison, managing director at Monaco-based McLaren Securities.
Debt markets built on gains made on Thursday, with bets that the Fed will make fewer rate rises next year than it is currently projecting, reflecting bigger concerns about the economy and doubts about significant inflation.
In Europe, Spanish bonds lagged in a broad rally on Friday ahead of an uncertain national election, with the country's traditional system of two-party dominance facing an unprecedented challenge from populist movements.
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