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Global shares decline as higher Treasury yields weigh on stocks

TOKYO (AP) – Shares retreated yesterday in Europe and Asia as a rise in bond yields added to pressure on stocks.

France’s CAC 40 slipped 0.7 per cent in early trading to 8,001.58, while Germany’s DAX declined 0.4 per cent to 18,596.23. Britain’s FTSE 100 edged nearly 0.2 per cent lower, to 8,240.60.

The future for the S&P 500 was down 0.6 per cent while that for the Dow Jones Industrial Average slipped 0.5 per cent.

In Asian trading, Japan’s benchmark Nikkei 225 shed 0.8 per cent to 38,556.87. Australia’s S&P/ASX 200 dipped 1.3 per cent to 7,665.60. South Korea’s Kospi lost 1.7 per cent to 2,677.30. Hong Kong’s Hang Seng slipped 1.8 per cent to 18,477.01, while the Shanghai Composite was little changed, edging up less than 0.1 per cent to 3,111.02.

The International Monetary Fund raised its forecast for China’s economic outlook, saying it expects the number two economy to grow at a five per cent annual pace this year. But it also warned that consumer-friendly reforms are needed to sustain strong, high-quality growth.

Strong spending by United States (US) consumers has been one of the main reasons the economy has managed to defy predictions of a recession, at least so far, but some cracks have begun to show. Lower-income households in particular have begun to buckle under the pressure of still-high inflation.

The Federal Reserve (Fed) has been holding the federal funds rate at the highest level in more than two decades in hopes of grinding down on the economy and investment prices enough to get high inflation fully under control.

If it leaves rates too high for too long, it could kneecap the job market and overall economy. But a premature cut to interest rates could allow inflation to reaccelerate and inflict even more pain on US households.

A person stands in front of an electronic stock board in Tokyo, Japan. PHOTO: AP