Shares were down globally. UBS bank reported worse-than-expected losses as a result of the credit crisis.

The dollar index, which tracks the U.S. currency against a basket of counterparts, rose to 76.616, its highest level since February and the eighth straight trading day of gains.

The euro sank to a six-month low against the dollar and was trading around $1.4877. Britain's pound slid to a 21-month trough just above $1.90.

Investors have been unwinding currency trades against the dollar, boosting the greenback as evidence grows that the world economy is slowing fast and perhaps may be doing so more than expected.

'The deteriorating economic outlook for the euro zone and elsewhere is now having an impact after the market had become used to weakness in the U.S. economy,' said Kosuke Hanao, head of forex sales at HSBC in Tokyo.

The same pressures have been weakening once high-flying commodities, which often move in contrary directions to the dollar as an inflation hedge.

Oil fell around $1 a barrel despite concerns over supply disruptions stemming from the Russia-Georgia clash.

U.S. crude fell 90 cents to $113.50 a barrel, hovering at its lowest since early May. The contract has fallen more than $30, or around 23 percent, from the record above $147 a barrel touched on July 11.

Gold tumbled to its weakest in almost eight months before recovering slightly to around $808 an ounce. Platinum and silver also dropped to their lowest level since December.

 Stocks lower

Stocks were generally lower. The FTSEurofirst 300 was off 0.5 percent, hit by falling energy stocks.

UBS reversed early losses after it unveiled a plan to break up its business into three autonomous units.

The bank, which has been Europe's hardest-hit victim of the credit crunch so far, earlier said its second-quarter net loss amounted to 358 million Swiss francs ($332.4 million), compared with forecasts of a loss of 273 million francs in a Reuters poll.

'It continues with the theme we've been seeing from bank executives, where they're talking about no signs of real improvement in terms of the economic and financial trends,' said Barclays Stockbrokers strategist Henk Potts.

Japan's Nikkei earlier closed down 127.31 points, or around 1 percent, to end at 13,303.60, after rising 2 percent the previous day. The broader Topix shed 0.7 percent to 1,271.42.

Euro zone government bond prices gained. Two-year yields were 0.4 basis points lower at 4.063 percent, while 10-year yields were 0.3 basis points lower at 4.236 percent.