LONDON (Reuters) - Jitters about the U.S. economy and the credit crisis kept investors cool on riskier assets on Tuesday, sending stocks generally lower and boosting the Japanese yen against higher yielding currencies.

Caution grew on the back of data showing growth in U.S. factory activity slipped in November to the lowest since January and after Federal Reserve policymakers gave a sober assessment of the world’s biggest economy.
Investors have also settled into a pattern of blowing hot and cold with sentiment, lifted by hopes for further interest rate cuts and depressed by poor data and a continuing drip of fear about the credit market.
“Credit related concerns remain very close to the surface,” RBS Global Banking fixed income strategists said in a note to clients.
MSCI’s main world stock index was down 0.3 percent on the day, held up from deeper losses by its emerging market components. Emerging markets were bucking the general downward trend with a 0.3 percent gain.
European shares fell, led lower by handset maker Nokia and steelmaker ThyssenKrupp, whose updates left investors unimpressed.
The FTSEurofirst 300 index of top European shares was down 0.7 percent.
“It’s difficult to see a yearend rally, with the headwinds so strong: oil, the financial crisis, and housing markets,” said Franz Wenzel, a strategist at AXA Investment Managers in Paris.
Focus was also on interest rates with European Central Bank seen holding and some betting on a Bank of England cut on Thursday. The Fed is widely expected to cut next week.
Earlier, economy-sensitive machinery and shipping shares dragged Japanese stocks lower. The benchmark Nikkei closed down 0.95 percent to 15,480.19, down 148.78. The broader TOPIX finished down 1.09 percent at 1,515.50.
-------------------------Dollar, bonds
The yen gained against the dollar and higher-yielding currencies as concerns about credit turmoil and escalating tensions in the money market prompted investors to cut back risky positions.
The dollar kept a firmer tone against the euro and elsewhere as investors awaited this week’s key U.S. employment report and the Fed’s meeting next week.
“The focus is on the perception of risk and how quickly the U.S. economy is slowing,” said Jeremy Stretch, market strategist at Rabobank. “The financial stress is continuing to build.”
The dollar was down 0.2 percent at 110.24 yen while the euro was down 0.3 percent at 161.47 yen. The euro was down 0.1 percent at $1.4645.
Deutsche Bank’s currency returns index -- which aims to mirror the performance of the FX market as a whole -- showed the worst performance in November since August.
Yields on 10-year paper were at 4.08 percent, while the two-year cash yield was at 3.77 percent.