THE number of Americans signing up for unemployment benefits fell unexpectedly last week by 22,000, rekindling fears that US interest rates may be raised by the Federal Reserve.

The inflation-sensitive US Treasury bond market slipped after release of the report and analysts said the bond weakness might follow through to share prices on Wail Street. The Dow Jones index closed at 5921.67 down 8.95. But the weakness in bond prices fed through to international bond markets and the Irish bond market was not immune. Prices fell 10p to 20p between the five and 10-year area, although there was a much lower level of trading that in recent weeks. Share prices also fell throughout Europe, mainly in response to the weakness on US markets.

The main focus today will be on September producer price and retail sales figures in the US, to see if there are any further indications of an upturn in inflation. If these figures do suggest that inflation is ticking up, a sharp sell-off in bonds and equities might be on the cards.