Global stock markets weakened on Friday and both the euro and gold slipped, as a new setback in talks to avert a US fiscal crisis and evidence of Europe's ongoing economic difficulties stoked investor nerves.
A proposal from Republican leader John Boehner to avoid the so-called fiscal cliff failed to get support from his party on Thursday casting fresh uncertainty over talks to avoid across-the-board tax hikes and spending cuts that could push the US economy into recession in 2013.
Anxiety was exacerbated by weaker-than-expected data from key corners of Europe as German consumer morale dropped to its lowest level in more than a year, Britain revised down growth figures and Sweden slashed its economic forecasts.
The worries prompted widespread selling in most major stock markets and saw investors head for safe-haven assets.
The dollar and yen and US and German government bonds rose as falls in London, Paris and Frankfurt pushed the FTSEurofirst 300 index of European stocks and MSCI's global index down 0.6 and 0.4% respectively.
Asian markets also fell mostly, tracking global sentiments.
"Risk assets look vulnerable over the holiday trading period," said Peel Hunt strategist Ian Williams.
Brent crude oil fell more than $1 per barrel towards $109 and bullion slipped $1.38 an ounce to a near four-month low and on track for its steepest weekly drop since June.