Sterling was sold heavily after Bank of England Deputy Governor Minouche Shafik voiced her caution regarding raising interest rates soon, as wages growth remains weak, and citing the appreciation of sterling by 18% since 2013 as an impediment to inflation. Out of nine members of the rate-setting Monetary Policy Committee, only Ian McCafferty voted to raise interest rates in the latest meetings. Sterling lost 0.51% against the dollar to 1.5139. It tumbled to a two-month low against the yen at 182.98. Sterling lost 0.43% against the euro to 0.7257.

Oil prices recovered some losses but were still badly hit and trading treacherously close to 11-year lows further down the road. Brent futures are down 1.75%, or 67 cents to $37.65 a barrel, after falling below $37 earlier in the session. U.S. crude futures lost 34 cents, or 0.94% to $35.29 a barrel, recovering from $34.54, their lowest level in seven years.

The rout in oil and metals prices took a heavy toll on energy and mining shares across the world, with the pan-European index FTSEurofirst 300 sliding to a 9-week trough at 1,386, before recovering a bit to 1,397, still down 0.26% for the day. Germany's DAX gave up 0.38% to 10,301. France's CAC was flat at 4,548. Britain's FTSE touched a fresh ten-week low at 5,937, before wiping its losses and gaining 0.13%, helped by South Africa-linked stocks, after President Jacob Zuma named widely respected Pravin Gordhan as South Africa's third finance minister in less than a week.

Yen kept up its momentum after positive data earlier. The Tankan Manufacturing Index came at 12 for the fourth quarter, beating forecasts of 11, while Tankan Non-Manufacturing Index came at an excellent 25. A result above 0.0 indicates improving conditions, while below indicates slowing activity. Yen touched an 11-day high against the euro at 132.44, before trading back at 132.79, up 0.14% for the day. Yen edged up 0.17% against the dollar to 123.79.