This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/6747581.stm

The article has changed 8 times. There is an RSS feed of changes available.

Version 3 Version 4
Global stocks fall on rate fears Stocks rebound despite rate fears
(about 3 hours later)
Global stock markets have fallen after US government bond yields rose to their highest level in five years, stoking fears of higher borrowing costs. Share prices on Wall Street opened higher on Wednesday, rebounding from a sharp sell-off on Tuesday.
With higher bond yields seen as a signal of higher interest rates to come, investors are concerned about the knock-on impact on corporate profits. The Dow Jones opened up 55.82 points, or 0.42%, at 13,350.83, with the Nasdaq index 0.37% higher at 2,559.09.
After the Dow Jones fell 130 points, or 1%, on Tuesday, Germany's Dax was down 0.7% in Wednesday lunchtime trading. US government bond yields rose to their highest level in five years on Tuesday, stoking fears of higher interest rates.
London's FTSE 100 index was less affected, down by just 2.1 points. This triggered a sell-off on many stock markets on Tuesday, as investors worried about the potential knock-on effect of higher rates on profits.
France's Cac 40 index had lost 8.2 points, while Japan's Nikkei had earlier ended the day down 28 points, or 0.2%. The main share indexes in London and Paris also returned to positive territory on Wednesday afternoon. By 1400 GMT, the FTSE 100 was 0.55% ahead at 6556.10 points, while the Cac-40 was up by 0.45%.
Cost of deals to rise? Germany's Dax index was less than 0.1% behind its opening level.
The yield on the benchmark US Treasury 10-year bond rose to 5.27% in New York last night, its highest level in five years. Overnight, Japan's Nikkei index had closed down 28 points, or 0.16%, at 17,732.77.
The rise in bond yields will push up the price of long-term borrowing, which in turn will increase the cost of borrowing for the world's big banks and private equity firms. Chinese influence
The Dow Jones had closed down 130 points, or 1%, on Tuesday after the yield on the benchmark US Treasury 10-year bond rose to 5.27%, its highest level in five years.
The rise in bond yields is set to push up the price of long-term borrowing, which in turn will increase the cost of borrowing for the world's big banks and private equity firms.
This is likely to feed through to higher interest rates for mortgage holders, and discourage company takeovers.This is likely to feed through to higher interest rates for mortgage holders, and discourage company takeovers.
"If those longer-term rates continued to rise, the frenzy of private equity-fuelled takeovers could fizzle - because the cost of financing takeovers would exceed the cash flows of the relevant target companies," said BBC Business Editor Robert Peston."If those longer-term rates continued to rise, the frenzy of private equity-fuelled takeovers could fizzle - because the cost of financing takeovers would exceed the cash flows of the relevant target companies," said BBC Business Editor Robert Peston.
He added that the situation was being exacerbated by the fact the Chinese were "switching hundreds of billions of dollars out of bonds and into equity-related investments".He added that the situation was being exacerbated by the fact the Chinese were "switching hundreds of billions of dollars out of bonds and into equity-related investments".
China has more than $1 trillion (£508bn) in foreign exchange reserves, which up until now have been mainly held in US Treasury bonds.China has more than $1 trillion (£508bn) in foreign exchange reserves, which up until now have been mainly held in US Treasury bonds.