Asian stock markets fell today, with rate-sensitive property shares among the worst hit, as US Treasury yields hovered near five-year highs, stoking fears a rise in global interest rates may curb spending.
Although many investors were nervous that Treasury yields might head higher still, some players tiptoed back into the bond market during Asian trading hours.
Financial spread-betting firms in London expect Britain's FTSE 100 to open 20 points lower, Germany's DAX to lose 50 points and France's CAC 40 15 points.
The dollar shot up to a 4-1/2-year high against the yen. "An extremely pessimistic outlook on the US economy has given way to views that US fundamentals are solid and are reflected in the sharp rise in yields," said a chief dealer at a US securities firm in Tokyo.
Oil prices dropped further below $69 a barrel on expectations that US gasoline supplies rose for the sixth straight week, easing worries of a crunch during the summer holiday season.
Concern that interest rates worldwide are heading higher, choking off some demand for commodities, added to the pressure. London Brent crude, currently seen as more representative of the global market than US oil, fell 18 cents to $68.61 per barrel, after falling 77 cents in New York.