By Jemima Kelly
LONDON (Reuters) - World stocks edged lower on Monday, led by a broad sell-off in tech stocks that drove a risk-off mood across markets, with the dollar slipping to a ten-week low against the yen.
Away from the main markets, bitcoin's vertiginous ascent showed no signs of slowing down, with the cryptocurrency soaring to another record high just a few percent away from $10,000 (£7,477.07) after gaining more than a fifth in value over the past three days alone.
Wall Street looked set to follow European and Asian shares lower. The MSCI world equity index, which tracks shares in 47 countries, edged down 0.1 percent.
Tech stocks, down 0.8 pct by 1312 GMT, were among the biggest fallers in Europe, after a downbeat note from Morgan Stanley (NYSE:MS) on global technology downgraded Samsung (LON:0593xq) and Taiwan Semiconductor and argued it is "time for a pause" for chipmakers, which have seen stellar performance this year.
Strength in tech shares had pushed the S&P 500 and Nasdaq to record highs on Friday, but observers noted that demand for tech-related products such as semiconductors could eventually slacken.
"Investors could take this to also question valuations of other tech firms," a trader in Franfurt said.
The broader STOXX 600 European share index was down 0.2 percent, having earlier traded slightly higher on the day.
Earlier, Asian stocks retreated from a decade high, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 0.7 percent.
The index had risen to its highest since 2007 on Thursday, with equity markets having enjoyed strong support this year thanks to corporate earnings rising on the back of an improving global economy.
South Korea's KOSPI fell 1.4 percent as tech shares slumped broadly. (KS)
Japan's Nikkei pared earlier gains and fell 0.3 percent with chip makers suffering losses. (T)
CHINA WORRIES
Shanghai shares also fell, losing 0.9 percent to hit a three-month low, having already been on a shaky footing due to a rout in the domestic bond market and fresh moves to reduce risks in the asset management industry that may bring a sea change for banks. (SS)
The dollar fell almost half a percent against the yen, a currency that is traditionally sought at times of investor uncertainty, to a 10-week low of 111.01 yen.
"The Chinese stock market drop is reminiscent of the selloff that we saw in the summer of 2015, and that is causing some investors to become cautious going into the thin year-end markets," said ING currency strategist Viraj Patel, in London.
Euro zone bond yields nudged down, with southern Europe leading the way thanks to strength in the euro and reduced political uncertainty in the region after Germany moved a step closer to resolving the country's political impasse.[GVD/EUR]
In Germany, the 10-year Bund yield dipped 2 basis points to 0.35 percent.
"There is optimism about the formation of a grand coalition in Germany, and economic surprise indices for the bloc are at an all-time high," said Antoine Bouvet, rates strategist at Mizuho.
"That means there could be more investment in Europe, driving the currency higher, and the corollary to that is for market expectations for ECB policy has to be more dovish.
The euro hit a two-month high of $1.19565 in early deals in London, before easing back a touch.
Oil prices fell, with U.S. crude easing from two-year highs on prospects of higher output, but losses were limited before an OPEC meeting that is expected to extend output limits. [O/R]
Brent crude oil was down 30 cents at $63.56 a barrel by 1310 GMT. U.S. light crude was 65 cents lower at $58.30.
Bitcoin surged almost 5 percent to trade as high as $9,721 on the Luxembourg-based Bitstamp exchange, before easing back to just below $9,500 in volatile trade.
The digital currency has seen an eye-watering tenfold increase in its value since the start of the year, and has more than doubled in value since the beginning of October.
"Breaking $10,000 seems inevitable following the recent price action," said Alistair Milne, the Monaco-based manager of the Altana Digital Currency Fund.