Spot gold prices hit an archive $1, 878. 39 per ounce as the shaky global outlook prompted investors to maneuver more money into the safe haven, while oil prices tumbled on hopes Libya may resume full output soon as a six-month civil war appeared to be nearing an end.
Japan's Nikkei 225 index was marginally lower by midday, with increasing expectations that Tokyo will intervene in forex markets to weaken the strong yen offsetting growing worries how the US economy may be sliding back into a recession.
Shares elsewhere in the area as measured by the MSCI Asia Pacific ex-Japan index fell almost 1% after briefly edging into positive territory earlier within the session.
A similar pattern was seen in S&P 500 futures, which recoiled from early gains to slide 0. 2% by noon, pointing to more losses in Western markets later within the day.
"Given the economic hurdles faced in Europe and the United Says, an upward trend is hard to sustain, " said Park Yong-myung, the fund manager at Hanhwa Investment Trust Management.
Khiem Do, head of Hard anodized cookware multi-asset with Baring Asset Management in Hong Kong, said there would be little visibility on the direction of markets until it was clear whether america will slide into recession or not.
"The sentiment of markets is very weak right now, " he said.
MSCI's world stock index fell 0. 3%, bringing it's losses since late July to around 16%, closing in on the 20% decline that's often used to define a bear market.
A key event this week would have been a speech by Federal Reserve Chairman Ben Bernanke on August 26 in Fitzgibbons Hole, Wyoming, during which he is expected to provide an economic outlook and hints how policymakers plan to handle the turmoil in financial markets.
Bernanke used exactly the same event last year to suggest the Fed could help growth by purchasing long-term bonds, but no major announcements are expected this time.
On Fri, US stocks fell after Hewlett-Packard's weaker outlook and corporate shakeup added to uncertainty for investors following a month of bad surprises ranging from a US credit rating downgrade to some sharp slowdown in world growth.
Markets will also watch data on bond buying through the European Central Bank and debt issuance by European countries such as Italy on Tuesday to determine if the eurozone's debt crisis is worsening.
Also on Tuesday, a raft of preliminary manufacturing data will reveal whether economies from China to the eurozone are continuing to lose impetus.
Brent oil futures fell 2. 3% to $106. 10 a barrel, weighed down with a firmer US dollar and as the months-long conflict in oil-producing Libya seemed to enter its decisive phase, with rebel fighters streaming into the heart associated with Tripoli.
The dollar index, which tracks the strength of the greenback towards a basket of currencies, rose 0. 1%.
The dollar surged higher from the yen, but later pared some of its gains, with traders citing talk how the spike in the dollar was triggered by bids by a US financial institution.
The move came as investors were increasingly on edge about the likelihood that Japan may intervene to curb yen strength, in the wake from the dollar's drop down to a record low around 75. 95 yen late a week ago.
The dollar was last flat on the day at 76. 77 yen, having risen to up to 77. 23 yen earlier.