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The US Dow Jones Index fell 64.2 points, or 0.64 per cent, in a holiday-shortened four-day week as surging bond yields triggered fears that investors will yank money out of equities and pour it into less risky fixed-income securities. The Dow has now fallen 4.9 per cent since setting an all-time high on 11 March. Financial shares, such as Citicorp, Nationsbank and American International, led the decline as their profits are sensitive to interest rates.

In London, the FT-SE 100 rose 1.29 per cent last week. Companies with a high exposure to US markets, such as Glaxo, Reuters and BTR, led gains on hopes that the US rate rise will allow growth to continue without accelerating inflation.

In Germany, the DAX index rose 164.38 points, or 5 per cent. BMW was one of the star performers after announcing good profits for the fourth quarter of last year on strong demand for its 5-series and Z3 luxury cars. It is also switching to international accounting standards.

In France, the CAC 40 index rose 1.9 per cent, led by retailer Pinault- Printemps and electrical equipment maker Schneider, both up more than 5 per cent after they reported higher earnings. The CAC has risen 16 per cent in the first quarter, making it one of the best performing markets in Europe. Copyright: IOS & Bloomberg