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US stocks drop as bond yields spike

New York - US stocks opened lower on Tuesday as worries about spiking bond yields outweighed news that Verizon would buy AOL for $4.4bn.

Five minutes into trade, the Dow Jones Industrial Average was at 17 992.67, down 112.50 points (0.62%).

The broad-based S&P 500 dropped 12.97 (0.62%) to 2 092.36, while the tech-rich Nasdaq Composite Index lost 36.86 (0.74%) at 4 956.71.

Bond yields in the US lingered at high levels after a big jump Monday. Similar shifts were also roiling European equity markets.

"Fear over the accelerating bond market rout is causing a collapse of European stocks on Tuesday and feeding through to a considerably lower US market open," said a post from Jasper Lawler of CMC Markets.

AOL shot up 17.7% on news the Internet pioneer would be bought by Verizon in an effort to boost the telecom giant's presence in online media and advertising. Verizon fell 1.3%.

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