Global shares fell on Friday as investors backed away from a recent surge in tech stocks and turned back to inflation. The 10 year treasury yield jumped, bond markets sold off and the mood that had carried equities to fresh highs gave way to caution.

MSCI's main world stocks index fell 0.35%, while Europe's STOXX 600 dropped 1.36% after two straight days of gains. In Asia, the broadest MSCI index outside Japan lost 2.57%, and Japan's Nikkei slid 1.99% after wholesale inflation accelerated to 4.9% in April. Brent crude futures rose 3.47% to $109.39 a barrel, adding to worries that higher energy costs will keep price pressures alive.

The move in bonds was sharper. Yields on the German 10-year bond rose around 6 basis points to 3.1065%, the U.S. two-year note yield climbed 7.5 basis points to 4.0666% and the U.S. 10-year yield advanced 8.5 basis points to 4.5438%. Concerns about inflation hit demand for U.S. Treasuries, and a run of soft Treasury auctions earlier this week underscored how fragile the market has become.

Tim Graf said the rally had simply run too far, adding that rate markets were now the main force creating a pullback as investors confront the prospect that inflation may stay above target and force central banks to tighten further. Padhraic Garvey said delivered inflation remained the key issue for the Treasury market and that yields were still likely to test higher in the weeks ahead.

That pressure is feeding straight through to currencies and rate expectations. The dollar was on track for a 1.3% weekly gain, its strongest in two months, and the greenback pushed the yen to the weaker side of 158 per dollar. As yields rise and stocks wobble, markets are increasingly pricing a year in which the fight against inflation matters more than the chase for tech-driven gains.