Bets on more European Central Bank stimulus kept Europe's main stock markets and the euro steady on Thursday, but Britain's pound saw its biggest drop in almost a month after overnight Brexit talks turned sour.
It had been a mixed session for Asia amid a surge in coronavirus cases and the ejection of some Chinese stocks from S&P Dow Jones' indices, so there was little surprise Europe struggled to add to recent highs.
The pan-European STOXX 600 index was flat, though London's FTSE 100 did score its eighth straight gain as the Brexit uncertainty pushed the pound down 0.7pc to $1.33 and 90.86 pence per euro.
European Union and British leaders gave themselves until the end of the weekend to seal a new trade pact, with some $1tn in annual trade at risk of tariffs if they can't reach a deal by December 31, when transition arrangements end.
"There's still clearly some scope to keep talking, but there are significant points of difference that remain," Foreign Secretary Dominic Raab told BBC TV. "(On) Sunday, they need to take stock and decide on the future of negotiations."
For the ECB, economists expect its €1.35tn PEPP stimulus plan to be expanded by at least €500bn and its duration extended by six months to the end of 2022, with risks skewed towards even more.
The bank will announce its policy decision at 12:45 GMT, followed by ECB chief Christine Lagarde's 13:30 GMT news conference. Traders will be also listening to what she says about the euro's near 14pc rise since March.
"The critical element is that there has been an impact on (euro zone) growth recently," said Shoqat Bunglawala, head of global portfolio solutions for EMEA & APAC at Goldman Sachs Asset Management, referring to the second wave of lockdowns. "So we would expect to see some further support.
Euro zone government bond yields - which move inversely to price - continued to fall. Italian 10-year yields fell to a record low at 0.53pc. Spain and Portugal's hit 0.013pc and -0.022pc respectively.
In Asian trading, MSCI's broadest index for the region eased 0.4pc, with Japan's Nikkei ending 0.2pc lower. Both are up more than 60pc from March lows.
S&P 500 futures were 0.1pc higher after the Nasdaq dropped 2pc on Wednesday, when US regulators filed lawsuits again Facebook alleging the company used its dominance to buy or crush rivals, harming competition.
S&P Dow Jones Indices then said it would remove 10 Chinese companies from its equities indices and several others from its bond indices overnight. It followed a move by Donald Trump's outgoing administration to ban US investors from buying certain Chinese securities.
US lawmakers were also unable to sort out disagreements over aid to state and local governments that are holding up a broader spending package, though they did at least approve a stop-gap government funding bill.
"We've risen so far so fast that it's making investors cautious," said Michael McCarthy, chief strategist at stockbroker CMC Markets in Sydney.
"The fall in tech stocks was a bit of a concern, given that they've risen in all market weather over the last six weeks, so to see them come off might signal that we're looking at a short- term corrective move."
Elsewhere, faith in the recovery appeared to be holding up. Brent oil futures were up 0.8pc at $49.23 a barrel and US crude was up 0.9pc at $45.96 a barrel. Gold nursed losses at $1,839 an ounce.
"We think the market has certainly got confidence in the sustainability of this recovery," Goldman's Bunglawala said.