In April, the yen had firmed to the low 108 yen-range against the dollar, but temporarily softened on speculation that the U.S. Federal Reserve would raise interest rates, expanding the Japan-U.S. rate differential.
The three major Wall Street indexes hit session lows in late afternoon trading after the S&P 500 fell below 2369.23, its 50-day moving average.
About 8.37 billion shares changed hands on USA exchanges in the busiest trading day since March 21, compared with the 6.9 billion-share average for the last 20 sessions.
The reports raised questions over whether obstruction of justice charges could be laid against Trump, weakening confidence in the US president's ability to push through an aggressive stimulus program that investors had been banking on since his election last November.
A rally in the euro was reinforced by dollar losses, prompted by allegations that U.S. President Donald Trump disclosed highly sensitive intelligence information to senior Russian officials at a meeting last week. One explanation for the retreat might be weaker-than-expected readings on USA inflation and economic growth in the past month, data that have coincided with easing perceptions of political and economic risks in Europe. The S&P 500 financial sector tumbled more than 2 percent, led by losses in Bank of America and JPMorgan.
"The only political calibration the Fed has is how much Trumponomics we were going to get that they can't see yet", Neil Dwane, global strategist at Allianz Global Investors, said in an interview with Bloomberg TV.
Nine of the 11 major S&P 500 sectors fell with the only gain from utilities .SPLRCU and real estate .SPLRCR , defensive sectors with predictable if slow growth and high dividends. Coherus shares rose almost 7 percent to $23.55. Even so, USA policymakers "are in the mindset to raise as long as the markets are prepared for it", he said.More news: Netflix experimenting with price hike for subscribers
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The Bloomberg Dollar Spot Index has fallen for six straight days and is down nearly 5 percent this year. Against the yen, the dollar was down 0.6 percent to 112.42 yen. The Shanghai Composite Index edged 0.2 percent lower to 3,104.44.
The euro hit a six-month peak and German stocks touched a record high on Tuesday as signals on further European integration contrasted with political turmoil and fresh doubts about the economy in the United States.
The 10-year US Treasuries yield US10YT=RR dipped to 2.294 percent, flirting with its lowest level in the past two weeks.
Spot gold added 0.5 percent to $1,236.71 an ounce.
OIL: Benchmark U.S. crude rose 13 cents to $48.79 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, was up 24 cents to $51.89 per barrel in London. Benchmark yields in France lost two basis points to 0.87 percent, while those in Germany declined two basis points to 0.42 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.5 percent while Japan's Nikkei .N225 shed 0.4 percent. Hong Kong's Hang Seng index slipped 0.2 percent to 25,293.63.