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Global shares roiled by Yellen comment on high valuations

Traders work on the floor of the New

Traders work on the floor of the New York Stock Exchange in Manhattan during the afternoon of Wednesday, May 6, 2015. Photo Credit: Getty Images / Andrew Burton

TOKYO - Global markets drooped Thursday after comments from the U.S. Federal Reserve chief fanned fears about the American economy.

KEEPING SCORE: France's CAC 40 lost 1.5 percent to 4,909.75 and Germany's DAX slipped 0.9 percent to 11,245.62. Britain's FTSE 100 shed 1.2 percent to 6,852.22. U.S. shares were set to fall, with S&P 500 futures down 0.4 percent at 2,067. Dow futures were down 0.4 percent at 17,713.

YELLEN SPEECH: Federal Reserve Chair Janet Yellen suggested that stocks are generally overvalued, when she said market valuations were generally "quite high" in response to a question about risks to financial stability at a conference in Washington. Some market experts think the Fed will have to increase its short-term rate relatively soon to fight inflation.

THE QUOTE: "The highlight was ... Yellen's comments in a Q&A session on equity market valuations being fairly high," said Cynthia Jane Kalasopatan of Mizuho Bank in Singapore. "Fed's Chief Yellen also warned that low US Treasurys yields also mean that there is a risk that they may spike when the Fed normalizes policy later this year."

ASIA'S DAY: Japan's benchmark Nikkei 225 closed down 1.2 percent at 19,291.99. It was the first day of trading for the week after the Tokyo market was closed for national holidays. Australia's S&P/ASX 200 lost 0.8 percent to 5,645.70. South Korea's Kospi fell 0.7 percent to 2,091.00. Hong Kong Hang Seng was 1.3 percent lower at 27,289.97 and China's Shanghai Composite Index shed 2.8 percent to 4,112.21.

ENERGY: U.S. crude was up 18 cents to $61.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 53 cents to close at $60.93 a barrel in New York because of an unexpected drop in crude oil supplies and it reached as high as $62.58 during the day. Brent crude added 47 cents to 68.24 in London.

CURRENCIES: The dollar rose to 119.43 yen from 119.41 yen in the previous trading session. The euro inched down to $1.1342 from $1.1346.

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