(Alliance News) - Stocks in London are set to open slightly lower on Wednesday, amid worries of a protacted period of elevated US interest rates, with a day of services PMI readings ahead.

IG says futures indicate the FTSE 100 to open down 10.1 points, 0.1%, at 7,460.16 on Wednesday. The index of London large-caps closed down 40.56 points, or 0.5% at 7,470.16 on Tuesday

In the US on Tuesday, stocks on Wall Street fell sharply, with the Dow Jones Industrial Average down 1.3%, the S&P 500 down 1.4% and the Nasdaq Composite down 1.9%.

Stocks suffered as bond yields hit fresh highs, after robust jobs data added weight to the case for the Federal Reserve to keep interest rates elevated.

Figures from the US Bureau of Labor Statistics showed the number of job openings increased 690,000 to 9.61 million on the last business day of August, from 8.92 million at the end of July.

The print came well above market expectations, which had been expecting the number of job openings to dip to 8.8 million at the end of August, according to FXStreet-cited consensus.

"The sharp rise in long term rates relative to short term rates suggests investors think that US interest rates are likely to remain higher for longer due to the continued resilience of the US economy," said Michael Hewson, CMC Markets' chief market analyst.

"If this trend of rising long-term rates continues, then stock markets could well be in for even more volatility in the days and weeks ahead," he warned.

The dollar was slightly weaker in early transactions in Europe.

Sterling was quoted at USD1.2078 early Wednesday, higher than USD1.2065 at the London equities close on Tuesday. The euro traded at USD1.0469, up from USD1.0459. Against the yen, the dollar was quoted at JPY149.17, down a touch versus JPY149.22.

In Asia on Wednesday, equities were taking their cue from Wall Street. The Nikkei 225 index in Tokyo was down 1.8%.

Japan's service sector continued to see a solid rate of expansion, survey data showed, though at a slightly slower pace. The au Jibun Bank services purchasing managers' index fell to 53.8 in September from 54.3 in August. The composite PMI, which measures manufacturing and services, ticked down to 52.1 from 52.6.

In Shanghai, financial markets remained closed for Golden Week, while the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney closed down 0.8%.

Gold was quoted at USD1,821.20 an ounce early Wednesday, lower than USD1,824.87 on Tuesday. Brent oil was trading at USD90.77 a barrel, slightly lower than USD91.00.

In Wednesday's UK corporate calendar, there are half-year results from grocer Tesco and a trading statement from tile retailer Topps Tiles.

The economic calendar has the latest services purchasing managers' index prints from the EU, UK and US from 0900 BST.

By Elizabeth Winter, Alliance News senior markets reporter

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