GLOBAL MARKETS-Red October rumbles on as U.S. bond yields touch 5%

Red October rumbled on in world markets on Friday as the sight of U.S. government bonds yields hitting 5% for the first time since 2007 amid an increasingly threatening conflict in the Middle East left investors searching for safety. The traditional driver of world borrowing costs – the 10-year U.S. Treasury yield – had retreated to 4.94% ahead of U.S. trading but with oil bounding back above $93 a barrel and Israel hinting at a full-scale invasion of Gaza, the mood was fraught. Asia stocks had fallen to an 11-month low overnight and futures markets pointed to another slip on Wall Street, which has lost 2% over the last two days.