"The market's post-G20 swagger proved short-lived, with Asia, and then Europe, drifting into the red as investors considered the realities of the US-China trade war truce," said Spreadex analyst Connor Campbell.

The pound rebounded above $1.28 after the European Court of Justice (ECJ) ruled that European Union countries can unilaterally end a divorce process from the bloc.

And oil prices extended recent gains, fuelled by a Russia-Saudi Arabia pact to cap output.

US President Donald Trump and China's Xi Jinping sparked a worldwide rally Monday after calling a halt to their painful tariffs war for 90 days.

However, enthusiasm gave way Tuesday to caution over whether the world's two biggest economies can resolve their differences in the temporary ceasefire, which was agreed by Trump and Xi over dinner at the end of the G20 summit in Buenos Aires.

- 'Warm fuzzy feeling' -

The news lit a fuse under markets after a torrid year that has been dominated by the trade war between the world's top two economies, which many fear will hit global growth.

"Can the US and China really resolve their differences in 90 days?" asked Rodrigo Catril, senior strategist at National Australia Bank.

"It seems that more details and signs of progress will be needed if the initial trade truce warm fuzzy feeling is to be sustained."

There was also uncertainty about Trump's claims in a tweet that China had agreed to slash tariffs on car imports, with two advisers unable to provide clarity.

Separately on Tuesday, the British pound rose after the legal advisor to the EU's top court indicated Britain could decide to unilaterally reverse the country's "Article 50" EU withdrawal notification.

The case was referred to the ECJ by a Scottish court and hinges on whether the British parliament could simply revoke the process.

EU countries can unilaterally end a divorce from the bloc, Advocate General Campos Sanchez-Bordona said in a closely watched case launched by anti-Brexit politicians in Britain.

Judges at the ECJ usually, but not always, follow the legal opinions of the court's advocate general, and are expected to reach a ruling as early as this month.

- 'Cat among Brexit pigeons' -

May, who is struggling to win over enough people to support the agreement, also faces a row over her government's refusal to publish its legal advice.

"The top advisor to the ECJ threw a cat among the Brexit pigeons, saying that Britain can decide to withdraw its decision to leave the EU without needing the permission of the other member states," noted analyst Fiona Cincotta at City Index.

"The currency market had difficulty making anything out of this comment.

"Currency and bond markets could see more volatility later today."