A spike in U. S. Treasury yields triggered a selloff in equity markets on Wednesday, as investors feared rising funding costs might delay a potential recovery in the world's largest economy. The three main U. S. stock indexes turned negative early afternoon as Treasuries maturing in 10 and 30 years lost over a full point in price, sending yields to six? and nine? month highs, respectively.

The accompanying rise in bond yields raised worries about a U. S. economic recovery as this would lead to increased borrowing costs for consumers and corporations.

Yields on Fannie Mae and Freddie Mac mortgage bonds rose for a fourth day, after exceeding for the first time yesterday their levels before the Federal Reserve announced it would expand purchases to drive down interest rates on new loans.

U. S. home sales picked up in April, but the positive sign was outweighed by worries that the U. S. government was incurring too much debt as it tries to spend its way out of recession, sending Treasury prices falling along with stocks.

Meanwhile, Moody's Investors Service affirmed the AAA rating for the United States but warned the top credit could come under pressure if the government fails to reduce debt levels once economic growth returns.

The U. S. dollar weakened against the British pound, propelled by hopes of improvement in the UK economy and banking sector, but firmed against the euro after a European Central Bank official said interest rates could fall further if economic conditions worsen.

Investors also remained cautious as General Motors Corp moved closer to filing what would be the largest bankruptcy ever for a U. S. industrial company after a crucial bond exchange proposal failed. The chances of General Motors going into Chapter 11 are quite high. Hong Kong and Chinese markets are closed today for the Dragon Boat Festival holiday

Asian stocks fell, led by banks and mining companies, after Australia & New Zealand Banking Group Ltd. sold shares and metal prices declined.

The Baltic Dry Index, a measure of shipping costs for commodities, climbed 7.6% in London yesterday, its 18th? straight day of gains. The measure surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore.