US shares tumble on rates jitters

US stocks have been through a roller coaster ride of late

Fears that the US Federal Reserve could be preparing to raise interest rates for a 17th time prompted a sell-off on Wall Street.

Investors took fright after Fed chief Ben Bernanke warned rates may have to rise to curb "unwelcome" inflation.

A sharp rise in oil prices - a key driver of inflation - prompted by Iran's warning over its current nuclear stand off with the US also weighed.

The Dow Jones index closed almost 200 points, or 1.8%, down at to 11048.72.

Elsewhere, the technology laden Nasdaq Composite Index fell 2.2% to 2169.62 while the Standard & Poor's 500 fell 1.8%.

"It's all about the price of oil and of course the Federal Reserve," said Peter Cardillo, analyst at SW Bach.

Rates jitters

Mr Bernanke's warnings over rates, at a forum of global bank chiefs, dashed investor hopes of a pause in the recent rate tightening cycle, with some experts suggesting the comments hinted at further rate rises during the rest of the year.

The alert was all the more surprising as any rise in inflation would come at a time when the US economy is slowing down.

Figures released on Monday, pointing to slowing growth in the service sector, were the latest data to show that the formerly red hot economy is now cooling.

"In reality, nothing's really changed," Steve Neimeth, senior vice president and portfolio manager at AIG SunAmerica, said.

"But now, Bernanke has finally said the consumer is weak and that inflation is at the high end of their range. The market's basically nervous that they've gotten a clear signal from him."