US stock indexes down in early trading as investors weigh bond market volatility; AOL soars

U.S. stocks fell sharply early Tuesday, extending the market's losses from the day before. Investors weighed the implications of a global slump in bond markets and rising oil prices. AOL soared on news that Verizon has agreed to acquire the Internet pioneer for about $4.4 billion.

KEEPING SCORE: The Dow Jones industrial average fell 142 points, or 0.8 percent, to 17,962 as of 10 a.m. Eastern. The Standard & Poor's 500 index slid 16 points, or 0.8 percent, to 2,089. The Nasdaq composite lost 51 points, or 1 percent, to 4,942.

YOU'VE GOT A DEAL: Verizon agreed to buy Internet pioneer AOL for about $4.4 billion, a 15 percent premium to its closing price on Monday. Shares in AOL jumped 17.8 percent in early trading. The stock added $7.56 to $50.16. Verizon slipped 56 cents, or 1.1 percent, to $49.23.

SALE TALK: Shares in Pall vaulted 19.3 percent on a published report that the company is close to being acquired. The stock added $19.21 to $118.66.

WHIFFED: International Flavors & Fragrances fell 2.7 percent after the company warned that its earnings growth could be muted this year should the dollar's strength continue to have a negative impact on sales. The stock slid $3.22 to $116.08.

VOLATILE BONDS: A sell-off in global bond markets, including U.S. Treasurys, has increasingly rattled investors since last week. Weakness in bond prices pushes up borrowing costs and can drag on economic activity. Federal Reserve chief Janet Yellen recently warned that long-term bond yields, which move in the opposite direction to bond prices, could quickly shoot higher once the Fed begins raising interest rates from a record low.

The yield on the 10-year Treasury note rose to 2.29 percent from 2.28 percent late Monday. The yield was below 2 percent as recently as April 28.

In Europe, the German 10-year yield was up another 0.10 percentage points on Tuesday, to 0.72 percent, having traded as low as 0.08 percent last month.

MARKETS OVERSEAS: In Europe, Britain's FTSE 100 fell 1.6 percent and Germany's DAX sank 2.1 percent. France's CAC 40 dropped 1.4 percent. In Asia, Japan's Nikkei 225 closed flat. South Korea's Kospi was little changed. Hong Kong's Hang Seng was down 1.1 percent, while Australia's S&P/ ASX 200 rose 0.9 percent. China's Shanghai Composite index advanced 1.6 percent.

ENERGY: Benchmark U.S. crude gained 69 cents to $59.93 a barrel on the New York Mercantile Exchange.

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AP Business Writer Youkyung Lee in Seoul, South Korea, contributed to this report.