(Updated prices after US stock market close)
Wall Street equity indexes closed lower after Wednesday's choppy session while a bond auction pushed Treasury yields higher and the dollar rose against the yen after cautious central banker comments.
Oil prices rose after a bigger-than-expected draw in U.S. crude stockpiles and on potential escalation in the Middle East, even as investors worried about weak demand in China.
Earlier, Bank of Japan Deputy Governor Shinichi Uchida said the central bank will not raise interest rates while financial markets are unstable, pushing the yen down.
But in equities, the Nikkei .N225 rose 1%, adding to Tuesday's 10% rebound from Monday's sell-off. The Nikkei's 12.4% plunge had started a global stock rout as investors went into risk-off mode.
After opening higher on Wednesday, Wall Street's benchmark S&P 500 started losing ground in the late morning and fell further following a U.S. 10-year Treasuries auction.
"It's a little more than a weak 10-year auction, which I'm sure contributed," said Lindsey Bell, chief strategist at 248 Ventures in Charlotte, NC. "You don't just have the fall we had on Monday and it's done. You typically test the lows again before we can move out of this downtrend."
She also noted that some investors are "taking advantage of short-term pops in stocks" to take profits.
On Wall Street, the Dow Jones Industrial Average .DJI fell 234.21 points, or 0.60%, to 38,763.45, the S&P 500 .SPX lost 40.53 points, or 0.77%, to 5,199.50 and the Nasdaq Composite .IXIC lost 171.05 points, or 1.05%, to 16,195.81.
MSCI's gauge of stocks across the globe .MIWD00000PUS fell 0.35 points, or 0.05%, to 770.64 after earlier rising to a session high of 783.83. Europe's STOXX 600 .STOXX index had closed up 1.5%.
In currencies, the yen dropped after the BoJ comments on rate increases, which soothed investors' concerns about volatility in the Japanese currency, which had soared against the dollar on Monday on fears of a U.S. recession, causing a broader market rout.
Against the Japanese yen JPY= , the dollar strengthened 1.75% to 146.83.
The dollar index =USD , which measures the greenback against a basket of currencies including the yen and the euro, gained 0.2% at 103.19, with the euro EUR= down 0.08% at $1.0921.
U.S. government bond yields rose after the Treasury Department saw soft demand for a $42-billion sale of 10-year notes and as companies rushed to sell debt with risk appetite improving. Supply was the main focus as traders were waiting on fresh economic data for clues about the strength of the U.S. economy.
The yield on benchmark U.S. 10-year notes US10YT=RR rose 7 basis points to 3.958%, from 3.888% late on Tuesday. The 30-year bond US30YT=RR yield rose 8.1 basis points to 4.2579%.
The two-year note US2YT=RR yield, which typically moves in step with interest-rate expectations, fell 0.2 basis points to 3.9827%, from 3.985% late on Tuesday.
In energy markets, U.S. crude CLc1 settled up 2.77% at $75.23 a barrel and Brent LCOc1 rose to $78.33 per barrel, up 2.42% on the day.
In precious metals, spot gold XAU= lost 0.2% to $2,384.59 an ounce. U.S. gold futures GCc1 fell 0.05% to $2,387.80 an ounce.
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