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| Version 4 | Version 5 |
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| Stocks rebound despite rate fears | Stocks rebound despite rate fears |
| (about 3 hours later) | |
| Share prices on Wall Street rose Wednesday, rebounding from Tuesday's sharp sell-off. | |
| By midday trading the Dow Jones was 56.47 points, 0.42% ahead at 13,351.48 with the Nasdaq up 0.44% to 2,560.96. | |
| US government bond yields rose to their highest level in five years on Tuesday, stoking fears of higher interest rates. | US government bond yields rose to their highest level in five years on Tuesday, stoking fears of higher interest rates. |
| 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. | 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. |
| However Europe's main share indexes all finished in positive territory on Wednesday. | |
| London's FTSE 100 and Paris' Cac-40 both gained 0.6%, to 6559.60 and 5934.27 points respectively while Germany's Dax advanced marginally. | |
| Overnight, Japan's Nikkei index had closed down 28 points, or 0.16%, at 17,732.77. | Overnight, Japan's Nikkei index had closed down 28 points, or 0.16%, at 17,732.77. |
| Chinese influence | Chinese influence |
| Strong economic data, especially a considerably better-than-expected jump in retail sales for May, was behind the Wall Street gains. | |
| 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 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. | 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. |