World markets were in hesitant mood on Tuesday as investors wondered what China's response would be to civil unrest in Hong Kong, while the U.S. dollar eased off the throttle after its biggest quarterly gain in six years.

Like most corners of the world, Europe saw limited appetite for risk early on before euro zone inflation data ECONG7 and after what has been the toughest quarter for global stocks since the peak of the euro crisis.

The FTSEurofirst 300 .FTEU3 index of top European shares started up 0.2 percent at 1,374.36 points, but it was barely changed on the month despite this month's interest rate cut and new dump of cheap funding from the European Central Bank.

German government bonds DE10YT=TWEB, Europe's benchmark in the fixed income market, were also set for their first rise in yields in seven months while the euro was staring at its biggest monthly drop since February 2013. [GVD/EUR][FRX/]

"Each time we have seen market consolidations this year, there has been an upward readjustment just a few weeks later. Will this time be different? I'm not convinced," said Yannick Naud, portfolio manager at Sturgeon Capital in London.

On a broader scale, MSCI's 45-country All World stock index .MIWD00000PUS, was on course for a drop of almost 3 percent on the month and its and biggest quarterly fall since Q2 2012 when the euro zone's debt crisis was at its most intense.

As well as signs the era of record low interest rates is finally coming to an end in the world's largest economy, the United States, investors have also had to cope with a host of global geopolitical difficulties in recent months.

In the latest of those tensions, tens of thousands of pro-democracy protesters blocked Hong Kong streets on Tuesday, in one of the biggest political challenges to Beijing since the Tiananmen Square crackdown 25 years ago.

Hong Kong's Hang Seng Index .HSI shed another 1.3 percent to its lowest in three months. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.3 percent having already fallen sharply on Monday.

The unrest was an added complication for investors amid long-standing concerns about the health of China's economy.

An HSBC survey of manufacturing (PMI) for September disappointed slightly by showing a final reading of 50.2, steady on August but down from its preliminary 50.5.

One bright spot was a measure of new export orders which climbed to a 4-1/2-year-high of 54.5. The official version of the PMI is due on Wednesday and analysts look for a steady outcome around 51.0. ECONCN

Chinese shares have been less troubled by events in Hong Kong, perhaps because news and images of the protests are hard to come by on the mainland. The Shanghai index .SSECinched up 0.1 percent to near a 19-month peak.

DOLLAR ON A ROLL

The U.S. dollar hovered at a four-year peak against a basket of major currencies .DXY and its gains of 3.5 percent so far this month were the largest since February 2013 and in six years on a quarterly basis. <FRX/>

The scale of the gains tempted profit-takers on Tuesday and the dollar took a small step back to 109.42 yen JPY= and off a six-year high of 109.75 hit overnight.

The euro came within a whisker of its November 2012 trough of $1.2661 EUR= before edging back up to $1.2678.

Investors awaited September inflation data for the euro zone due at 5 a.m. EDT, seeking cues on the likely response from the ECB when it meets in Naples on Thursday.

One of the worst-performing major currencies this month was the New Zealand dollar, which is down nearly 7 percent.

Data on Monday confirming the Reserve Bank of New Zealand had intervened to weaken the currency sent it as low as $0.7708 NZD=D4, before a bounce to $0.7802.

The stronger U.S. dollar has been a heavy weight on many commodities since it makes them more expensive for buyers using other currencies.

Spot gold XAU= was down at $1,216.50 an ounce, not far from last week's trough at $1,206.85 and poised to post its sharpest monthly loss since June 2013.

U.S. crude oil CLc1 eased a couple of cents to $94.55 a barrel, after managing a modest rally on Monday. Brent LCoc1 nudged up 5 cents to $97.25 but remained uncomfortably close to its recent two-year low.

Oil prices on both sides of the Atlantic were on track for their third monthly loss in a row due to ample supply and subdued demand in Europe and China.