Shares under pressure over China fears US government bond yields are at 22-month highs while growth-focused products such as stocks and commodities are again under pressure as traders contemplate a market with less central bank support. In addition, sensitivity over the cost of borrowing can also be seen in China, where the mainland stock market has dropped sharply as worries about a spike in short-term money market rates adds to concerns about the world's second-biggest economy. The FTSE All-World equity index is down 0.7 per cent as the FTSE Eurofirst 300 dips 1.1 per cent and US index futures suggest the S&P 500 will drop 13 points to trade at 1,580. That will leave the Wall Street benchmark 5.3 per cent below its record high hit a month ago, a retracement primarily based on the prospect of the Federal Reserve tapering its vast stimulus. The fear of less Fed largesse helped remove $2tn from the value of global equities last week, according to Bloomberg calculations. Some analysts think investors will continue to display nervousness in coming sessions. "We see little relief this week to the pain inflicted on markets from tapering fears," Crédit Agricole said in a research note. Alongside the Fed fretting, traders are also having to deal with anxiety over China. "Weaker growth and funding concerns in China added another layer of uncertainty to the market psyche," the French bank added. The People's Bank of China over the weekend restated its commitment to moderate credit growth and a prudent monetary policy, saying it would try to improve liquidity management in order to let money better serve the real economy and support economic growth. The overnight repo rate, an important gauge of China's interbank funding costs continued to fall from last weeks high of 12 per cent, falling more than 200 basis points to 6.6 per cent. However, equity traders appeared spooked by the PBoC's comments on Monday that liquidity was "reasonable" and this contributed to bloodletting in Chinese financial stocks. The Shanghai Composite index consequently fell 5.3 per cent to breach the 2,000 level, a plunge that exacerbated declines across the region and fed into Europe's weak start. The Hang Seng in Hong Kong lost 2.2 per cent, Tokyo's Nikkei 225 index shed 1.3 per cent - despite the yen initially weakening versus the dollar - and Sydney's S&P/ASX 200 declined 1.5 per cent. The latter remains particularly sensitive to Chinese demand expectations because of the country's large resources sector. So news that Goldman Sachs had lowered its estimate for China's gross domestic product growth for this year to 7.4 per cent from 7.8 per cent - citing those tighter financial conditions and weaker economic indicators - has hit industrial commodities and mining shares. Copper is down 3.1 per cent to $3.00 a pound, its cheapest since July 2010, and Brent crude is slipping 23 cents to $100.68 a barrel. Adding to the downward pressure is a stronger dollar, a function of broader market angst and rising US interest rates as investors adjust to the news from the Fed and dismiss the erstwhile haven status of highly-rated fixed-income products. "A better economic outlook will eventually need to be priced into the short end of the yield curve," Barclays Capital said in a research note. This suggests that there is a catch-up trade for the US dollar versus low-yielding currencies [such as the yen]. The benchmark US 10-year yield is up six basis points to 2.60 per cent, its highest since August 2011. Similar moves can be seen in Bunds and Gilts. The dollar index is firmer by 0.2 per cent as it gains ground against the euro and sterling. The firmer greenback and the prospect of less central bank liquidity is punishing gold, the yellow metal falling $14 to $1,282 an ounce and flirting with its lowest since September 2010.