The yen tumbled against the dollar and euro after Japan's government stepped intervened to curb the unit's persistent strength, which it said threatened the nation's post-earthquake recovery.
Traders meanwhile awaited monetary policy announcements from the European Central Bank and Bank of England due Thursday, a day before the United States publishes vital employment data.
"It's all doom and gloom for the markets at the moment but at least... things look just a little bit better after US markets recovered slightly (overnight) from their lows," said Simon Denham, head of Capital Spreads trading group.
"In order to turn things round we're going to need something spectacular from (Friday's US) non-farm payroll" figures, he said.
In early European stock market deals, London rose 0.21 percent, Frankfurt gained 0.54 percent, Paris climbed 0.51 percent, Madrid added 0.63 percent but Milan dipped 0.16 percent, giving back early gains.
The dollar soared to 79.94 yen from 76.97 yen in New York late Wednesday, while the euro was lower at $1.4245. The price of gold, viewed as a safe haven investment in troubled economic times, traded at $1,664.75 an ounce on the London Bullion Market, off Wednesday's record high of nearly $1,673.
"Financial markets (Wednesday) continued to be rocked by a perfect storm of poor economic data, sovereign debt risk and political turmoil as equity markets in the US and Europe hit multi-month lows on fears that the global recovery is grinding to a halt amid a growing solvency crisis," said Michael Hewson, analyst at CMC Markets.
"Given recent declines it looks like we could well see a bounce back today as central banks take centre stage, as markets look to them as the last man standing, to prevent a complete market meltdown in Europe."
Markets will be watching for whether the ECB resumes a policy of buying bonds issued by some of the weaker eurozone states so as to help ease the market pressures on them.
"A revival of the ECB's securities markets program (SMP) is the only real option that would prevent a liquidity crisis for Spain and Italy," Goldman Sachs economist Dirk Schumacher said.
Traders have sent the yields and risk premiums on Spanish and Italian bonds to record highs in recent days.
The ECB is meanwhile certain to keep its main lending rate at 1.50 percent after two rate hikes so far this year and while analysts want to know if it will be raised again in 2011, they are now most concerned about who will contain the debt crisis.
In London, the Bank of England is tipped to maintain its main interest rate at a record-low 0.50 percent due to weak economic growth. Earlier on Thursday, the Bank of Japan voted to keep its key rate unchanged between zero and 0.1 percent.
Most Asian stock markets closed lower on Thursday but Tokyo finished in positive territory.
Copyright AFP (Agence France-Presse), 2011