US Treasuries also declined. Optimism that policymakers may be able to contain the debt crisis has helped stocks and other markets in recent weeks, while pressuring government bonds.
A report in Britain's Guardian newspaper late Tuesday that France and Germany had agreed on a deal to increase the euro zone bailout fund's firepower fivefold was another cause for a more positive mood. The reported agreement was later denied by two senior EU officials including a spokesman for the German finance minister.
"It seems the pendulum is swinging again towards a more optimistic take on that meeting and the expansion of the EFSF (European Financial Stability Facility)," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York.
The benchmark US Standard & Poor's 500 edged lower at the opening, with Apple shares falling 4.3 percent to $404.27. Its results after the US close on Tuesday fell short of estimates for the first time in years as it sold far fewer iPhones than expected.
The Dow Jones industrial average was down 28.46 points, or 0.25 percent, at 11,548.59. The Standard & Poor's 500 Index was down 4.97 points, or 0.41 percent, at 1,220.41. The Nasdaq Composite Index was down 21.44 points, or 0.81 percent, at 2,635.99.
World stocks as measured by the MSCI index were up 0.4 percent, paring gains after the US market open. The FTSEurofirst 300 index of top European shares was up 0.6 percent.
The euro recovered despite news of a ratings cut for Spain, and was last up 0.8 percent on the day at $1.3843. The dollar index, which measures the US currency against six major currencies, was down 0.4 percent.
Ratings agency Moody's cut Spain's sovereign rating by two notches, saying high levels of debt in the banking and corporate sectors leave the country vulnerable to funding stresses.
That followed a statement by Moody's the day before saying it would scrutinize its stable outlook on France's triple-A credit rating.
Despite the downgrade, the cost of insuring against a Spanish default fell, according to monitor Markit. Italian CDS prices also narrowed 14 basis points to 435 basis points.
Investors also have been focused on the meeting of European Union leaders' summit set for Oct. 23.
US Treasury prices declined, in line with the decline in other bond markets. The benchamrk 10-year notes fell 5/32 in price to yield 2.19 percent, compared with 1.94 percent on Tuesday. Benchmark yields were well off Tuesday's high of 2.077 percent, which was the highest since October 7.
Safe-haven gold also fell as well as Brent crude oil future.
Copyright Reuters, 2011