The Shanghai Composite Index closed down 4.3% and the Shenzhen Composite Index ended 4.9% lower, leading Asia to a mostly lower close. European shares also fell. Read about Asia stocks. Read Europe Markets.
U.S. stock index futures pointed to a lower open for Wall Street. See Indications.
"The weakness in equities, alongside a relatively light economic data calendar, does not bode well for pro-risk trading today," wrote Naeem Wahid, a strategist at Bank of Scotland, in a note to clients.
"Pro-risk" trades favor high-yielding currencies at the expense of the dollar and Japanese yen.
The dollar index (DXY 79.05, +0.11, +0.14%) , which tracks the greenback against a trade-weighted basket of six major currencies, changed hands at 79.049, up slightly from 78.995 in North American trade late Tuesday.
The dollar traded at 94.25 yen versus the broadly higher Japanese currency, down from 94.69 yen Tuesday.
"With very few big incentives, the U.S. dollar and Japanese yen remain vulnerable to risk appetite developments within their recent ranges, and this situation probably will not change anytime soon," said Tomoko Fujii, a rates and currency strategist at Bank of America Securities-Merrill Lynch Japan, in emailed comments.
The euro bought $1.4124, trimming earlier losses to leave it little changed versus the dollar, where it traded at $1.4127 late Tuesday.
The British pound extended losses after minutes of the Bank of England Monetary Policy Committee's August meeting unexpectedly revealed that Mervyn King, the BOE governor, and two other members of the panel had unsuccessfully argued for a 75 billion pound jump in the size of the bank's quantitative easing program to 225 billion pounds.
The MPC voted 6-3 to implement the 50 billion pound rise, which itself had proven larger than the market expected when it was announced Aug. 6. The minutes came as a surprise to traders and economists, who had expected a unanimous decision
