LONDON- Nasdaq traders were braced for a fresh pounding on Tuesday as a seven-year high for oil prices drove up global borrowing costs to pre-COVID levels, with even sub-zero German Bund yields at the brink of positive territory again.

Europe's big bourses were already down over 1% EU. but dealers were nervously eyeing -1.6% Nasdaq futures where higher interest rates on ultra-safe bonds now make stratospheric valuations on tech stocks look ever more balmy.

The Nasdaq's 4.5% loss so this year masks deeper falls -- 29 shares have lost 10% or more already this year, according to Capital Economics.

There had been overnight drops for Asia's big tech names too despite China easing policy again and it all kept MSCI's index of world shares on course for its worst January since 2016.

"The million dollar question is how quickly the Fed will move," said Hans Peterson, global head of asset allocation at SEB investment management.

"I'm not sure. The only thing I'm sure of is that (global economic) growth is quite good. And when you lack conviction you decrease your bets."

Investors are increasingly price in as many as four U.S. Fed hikes now this year and even one from the European Central Bank.

Two-year U.S. yields, which track short-term Fed expectations, crossed 1% for the first time since February, 2020. The 10-year was up at 1.84% and Europe's benchmark German Bund was testing zero again at -0.08%.

Oil and bank stockswere the only ones in positive territory in Europe, with the former jumping 1.3% as Brent crude prices hit $88 a barrel - their highest in more than seven years - after Yemen's Houthi group attacked the United Arab Emirates. 

It escalated hostilities between the Iran-aligned group and a Saudi Arabian-led coalition. After launching drone and missile strikes which set off explosions in fuel trucks and killed three people, the Houthi movement warned it could target more facilities, while the UAE said it reserved the right to "respond to these terrorist attacks".

"If current geopolitical tensions continue and OPEC+ members can’t deliver on their 400,000 barrel per day increase, macros coupled with the strong technical outlook could see prices push toward the $100 mark," CMC Markets' analyst Ash Glover said.

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan had edged higher early in the session, before turning and finishing down 0.5% in the afternoon.

China's blue chip CSI300 Index bucked the trend to stand 1% higher helped by better day for its troubled property firms.

On Monday, the People's Bank of China unexpectedly cut borrowing costs on its medium-term loans for the first time since April, 2020.

Its vice governor Liu Guoqiang said the central bank will roll out more support.

"We should hurry up, make our operations forward-looking, move ahead of the market curve," he told a news conference on Tuesday.



U.S.-listed megacap tech companies including Google's Alphabet, Apple, Meta,  Amazon and Microsoft were all down between 1.5% and 2.5% in premarket trading.

There was more angst for the bulls as bulge bracket investment bank Goldman Sachs' shares dropped 3% in premarket after its fourth-quarter profit fell nearly 13% and missed market expectations. 

In currency markets it was largely sedate with the dollar index, which tracks the greenback against a basket of currencies of major trading partners, up at 0.3% 95.5, while China's yuan hit a 3-1/2 year high.

Japan's yen fell after the Bank of Japan said it would stick to its ultra-loose monetary policy, despite hopes the economy is finally kicking clear of deflation.

Gold was slightly lower at $1,817.1642 per ounce and in emerging markets Russia and Ukraine stabilised after fears of another Russian military foray into Ukraine had sparked a heavy selloff in recent days. 

Russia's rouble RUB= , highly volatile recently, firmed 0.4% to 76.2 a dollar after reports the West was no longer considering cutting Russian banks off from the Swift global payments system and was instead eyeing sanctions on banks. 

Russian bonds, steadied near their March, 2020 lows, while the premium to hold Ukraine bonds over safe-haven U.S. Treasuries also narrowed fractionally having surged past 1,000 basis points, a level generally regarded as distressed, on Monday.  (Editing by Ed Osmond and Raissa Kasolowsky) ((; +44 (0)20 7513 4042; Reuters Messaging: Twitter @marcjonesrtrs))