LONDON Fears about the strength of the global economic recovery shadowed world markets on Monday despite optimistic noises from G7 finance ministers.

Japanese shares fell sharply for the fourth straight session on economic fears while worries about Wall Street weighed on the dollar and boosted U.S. bonds, Reuters reported.

European shares opened higher, correcting a steep decline on Friday that took shares to levels seen shortly after the September 11 attacks on New York and Washington.

U.S. stocks ended a touch lower on Friday, lifted from sharper declines by late bargain hunting. They were hit by a report showing consumer sentiment fell in early June, renewing fears that the economic rebound was losing steam.

Finance ministers from the Group of Seven industrial nations, meeting in Halifax, Nova Scotia, were coolly confident about the state of their economies.

"Growth in out economies has strengthened and should continue to consolidate throughout the year," they said in a communiqué on Saturday.

In Tokyo on Monday, the Nikkei average tumbled 2.35 percent to close at a three month low of 10,664.11 and the capital-weighted Topix shed 2.71 percent to 1.025.70.

Japan has been one of the few high-flying major bourses this year as U.S. and European shares have crumbled, but recent worries about sustained recovery have undermined gains.

European shares fared better, opening with a modest bounce after a five percent shellacking on Friday.

The FTSE Eurotop 300 index was up 0.6 percent at 1,070 points. last week, it sank to levels last seen in late September after four weeks of losses.

Dollar, Bonds Worries about the direction of U.S. stocks weighed on the dollar, which has wean weakening against major currencies for much of the year as the gloss has gone off U.S. investments.

But the currency steadied half a cent above recent 17-month lows against the euro with the late recovery in U.S. stocks on Friday making dealers reluctant to extend last week's hefty losses.

It stood at $0.9450 against the euro, little changed from New York on Friday.

The threat of further intervention from Japan contributed to a steadier tone against the yen. It stood at 124.18 yen.

U.S. Treasury yields headed towards six month lows at around 4.99 percent after a rally last week boosted by the weakness in shares.

Ten-year euro zone government debt yields pulled away from 15-week lows as profit-taking and gains by equities depressed prices.