[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 6 June 2007, 22:01 GMT 23:01 UK
US shares dip on rates concerns
Traders on floor of New York Stock Exchange
Interest rate jitters have hit the markets
US shares fell in Wednesday trading due to ongoing concerns about the possibility of higher interest rates to combat inflation.

The declines come after Federal Reserve chairman Ben Bernanke said overnight that US inflation remained "somewhat elevated".

US investor unease was further fuelled by the European Central Bank raising its interest rates on Wednesday.

The Dow Jones ended the day down 130 points to 13,466.

Meanwhile, the Nasdaq lost 24 points to 2,587, and the Standard & Poor's 500 gave up 14 points to 1,517.

'Hitting speed bump'

The Fed next meets to consider US interest rates on 27-28 June.

While most analysts expect rates to remain at 5.25% this time - where they have been for the past year - there is now some concern that the Fed may raise rates further towards the end of the year.

Worries about inflation were given a further boost by revised government figures showing wages rising faster than expected.

The new figures showed that US labour costs rose by 1.8% in the first quarter of this year, up from the initial estimate of 0.6%.

"The market hit a speed bump yesterday in the form of rising interest rates, and for the time being, it appears as if it will struggle to get back in high gear," said analyst Patrick O'Hare of Briefing.com.

News that the European Central Bank had increased rates by one quarter of a percentage point to 4% also came as broker Morgan Stanley said it thought that European stocks could fall by as much as 14% over the next six months.

Despite the interest rates concerns, Mr Bernanke says the US economy is continuing to expand and will enjoy moderate growth this year.

Meanwhile the US government has lowered its forecast for US economic growth, from 2.9% to 2.3% for the year from 1 October 2006.

The Dow Jones index has recently hit a series of all-time highs.


FTSE 100
23.70 0.44%
19.54 0.34%
Cac 40
14.48 0.38%
Dow Jones
78.53 0.76%
35.31 1.58%
S&P 500
11.22 1.02%
BBC Global 30
20.65 0.36%
Data delayed by at least 15 minutes

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific