Rate worries alarm US investors

Wall Street's interest rate anxiety sent stocks lower last night after comments from the Federal Reserve chairman, Ben Bernanke, compounded concerns about surging oil prices and a weak dollar.

The Dow Jones industrial average slid 23.85 points to 11,343.29 after gaining as much as 61 points early in the session. The Standard & Poor's 500 index dropped 5.42 points to 1305.19.

Stocks traded in positive territory for most of the session, after Wal-Mart - the world's biggest retailer - reported April sales up 6.8%, well above its 4-6% forecast.

A buoyant outlook for consumer spending was reinforced by the commerce department reporting personal incomes rose 0.8% in March as spending gained 0.6%, both figures topping economists' forecasts. Core consumer prices and construction costs increased more than expected.

But shares fell later as Mr Bernanke said he was worried about media and investor speculation that the Fed had decided to abandon raising interest rates in its long-running battle against inflation.

Last Thursday, he told a congressional panel the central bank might halt, but not necessarily abandon, its rate rises as it keeps a close watch on the economy's health. Continued tension over Iran's nuclear arms programme also drove up oil prices by almost $2 a barrel to $73.70 for light crude, while gold prices lingered at 25-year highs.