The dollar declined on Monday as the yen rallied amid slumping global stock prices pulled down by worrisome corporate profits in China and anxiety over potentially market-rattling economic data due this week from China, Europe and the United States.
Europe's main bourses fell, with the pan-European FTSEurofirst 300 index ending down 2.21 percent as a 30 percent slump in miner Glencore and a drop in Volkswagen shares added to a glum mood in markets.
Wall Street indexes fell some 2 percent or more, with fresh data showing profits at China's industrial companies falling 8.8 percent, and pushing down shares of U.S. raw material producers and energy companies.
The MSCI world equity index, which tracks shares in 45 countries, fell 7.82 points or 2.03 percent, to 376.48. Safe-haven U.S. Treasury debt prices were up sharply.
"Risk aversion is driving trade and, if we see some more signs of weak Chinese data later this week, we could see increased buying of the yen," said a London-based spot trader.
The dollar, which advanced broadly last week as U.S. Federal Reserve Chair Janet Yellen boosted expectations for U.S. interest rate hikes, was down 0.58 percent at 119.96 yen. The euro, too, was lower against the yen by 0.25 percent at 134.73 yen.
The dollar index was last off 0.21 percent after giving up early gains on an unexpected decline in contracts to buy previously owned U.S. homes in August. The data indicated the robust housing market could be losing steam.
The yen has been a traditional safe haven in the currency market, along with the Swiss franc, gaining during times of economic uncertainty or stress in financial markets. The dollar was off 0.40 percent against the franc.
The yen has gained nearly 4 percent against the dollar since China shocked global markets by devaluing its currency in early August.
Thursday's China Caixin Purchasing Managers' Index (PMI), will be more closely watched than usual by currency traders, who reckon a sharply slowing Chinese economy could delay rate hikes by the Fed. Euro zone data on inflation is due on Wednesday.
Attention will also be on U.S. jobs data due Friday for any clues on whether the Fed will raise interest rates in the near term or not. An upbeat report would strengthen expectations for a rate hike this year, some strategists said.
The euro was last up 0.32 percent against the dollar at $1.123.