The prospects of lingering uncertainty pushed down stocks in the eurozone, where both Frankfurt and Paris took their lead from weakness across Asian markets.
London, Europe’s biggest stock market, was closed for a public holiday.
In Frankfurt, the DAX 30 down 0.4% at 10,544.44 points and Paris — CAC 40 down 0.4% at 4,424.25 points at the close. London  bourse closed for a public holiday.
A weaker yen boosted Japan’s exporters, sending the Nikkei stock index 2.3% higher at the close.
But while the greenback and Japanese traders took heart from Yellen’s comments, other regional markets turned negative on the prospect of a rise in borrowing costs.
Shares in Hong Kong, where monetary policy is linked to that of the United States, fell 0.4%, while Sydney closed 0.8% lower and Seoul eased 0.3%.
The stronger dollar also weighed on oil prices as it makes the commodity more expensive for those using weaker currencies.
West Texas Intermediate slid 1.7% to $46.85 and Brent shed 1.4% to $49.21.
Analysts said prices were also depressed by worries over the outcome of a meeting next month between Opec and Russia aimed at addressing a global supply glut.
US shares rose yesterday with investors’ mood bouyed by hints from the US Federal Reserve of an interest rate hike because of strong growth.
Elsewhere, traders seemed less certain, with most world stock markets dipping as they tried to second-guess the Fed’s timing of its next rate rise.
In a much-scrutinised speech, Fed chief Janet Yellen on Friday hinted at a US interest rate rise by the end of the year.
Yellen said a pick-up in the world’s top economy and an improvement in the jobs market meant “the case for an increase in the federal funds rate has strengthened in recent months”.
She gave no timeframe during her speech at the annual Jackson Hole symposium of global central bankers, but Fed vice chairman Stanley Fischer later said September was a possibility.
“Sentiment towards the US economy was elevated on Friday following the hawkish comments from Janet Yellen which bolstered expectations over the Federal Reserve raising US rates in 2016,” FXTM research analyst Lukman Otunuga in an investors’ note.
Stephen Innes, senior trader at OANDA, said that “after a week of guessing, Yellen left little to the imagination when she stated that the case for a Fed rate hike had strengthened”.
He added, however, that any decision would remain “very much data-dependent”.
Analysts said attention will now be focused on key US jobs data, due to be released Friday, which, if strong, could help clinch the case for an early rate hike.
Christopher Vecchio, currency analyst at DailyFX, said that Yellen’s comments had pushed up the odds of a December 2016 rate hike from 44% on Thursday to 65% by the time the closing bells rang on Friday.
“With a significant economic calendar in store for the next few days for the US economy, there is a window of opportunity for markets to shift their expectations from a hawkish hold to perhaps an outright rate hike,” he said in a note.


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