Stocks closed sharply lower for the third session in a row yesterday as Wall Street agonised over the prospect of higher US interest rates. The Dow Jones industrial average ended down 69.02 points, or 0.65 per cent, to 10,621.27 after being down nearly 165 points at the day's low. In the broader market, declining issues beat advances 1,931 to 1,005 on active volume of 700 million shares on the New York Stock Exchange. The technology-laced Nasdaq Composite index was off 34.73 points, or 1.38 per cent, at 2,484.62. Analysts said the market feared that signs of a stronger global economy triggered widespread selling.

Among the latest signs that the global economy is bouncing back, Japan said its economy surged at a stunning 7.9 per cent annual pace in the first three months of the year, breaking a run of 11/2 years of negative growth. The positive growth in Japan put further upward pressure on the US bond market, boosting the yield on the key 30-year bond above 6 per cent - the highest in more than a year.