A gauge of world stocks tumbled on Tuesday, erasing early gains as US bond yields scaled the 3 percent threshold for the first time in four years, while oil prices reversed course after climbing above the USD 75 per barrel mark.

Equities in Europe hit session lows before closing near the unchanged mark and US stocks began to retreat after the US 10-year Treasury yield crossed the 3 percent mark to a high of 3.003 percent, its highest since January 2014. In addition, the two-year yield touched 2.5 percent for the first time since September 2008.

Benchmark 10-year notes last fell 6/32 in price to yield 2.9958 percent, up from 2.973 percent late on Monday.

The move higher in yields sapped the appetite for stocks, which initially rose on a strong batch of earnings from Verizon and Caterpillar. Rising bond yields provide more competition for stocks, especially those with high dividend yields.

"These higher Treasury yields are providing competition with riskier fixed income products and things like REITs and dividend-producing stocks," said Bill Northey, senior vice president with US Bank Wealth Management in Helena, Montana.

The bond market sell-off since late last week stemmed from inflation worries caused by rising commodity prices and growing Treasury debt supply, as well as bets the Federal Reserve would raise key borrowing costs further, analysts said.

Higher commodity prices also pose a risk for equities, with Caterpillar shares reversing course and last down 6.2 percent after the heavy equipment maker forecast increases in material expenditures due to rising steel prices.

"There are factors that are adding to inflation pressure like a tightening labour market, trade tension and rising commodity prices," Northey said.

The pan-European FTSEurofirst 300 index rose 0.03 percent and MSCI's gauge of stocks across the globe shed 0.64 percent.

MSCI's index is on track for its fourth straight decline, its longest losing streak in a month.

Wall Street was also weighed down by a 4.77 percent drop in Google parent Alphabet as strong growth in ad sales on search and YouTube were not enough to offset a surge in costs.

The Dow Jones Industrial Average fell 424.56 points, or 1.74 percent, to 24,024.13, the S&P 500 lost 35.73 points, or 1.34 percent, to 2,634.56 and the Nasdaq Composite dropped 121.25 points, or 1.7 percent, to 7,007.35.

The Dow has fallen for five straight sessions, its longest losing streak since an eight-day skid in March 2017.

Despite the disappointing outlooks, US corporate earnings have gotten off to the strong start that was widely anticipated, with the expected growth rate for the quarter currently at 21.1 percent, according to Thomson Reuters data. Of the 118 companies in the S&P 500 that have reported through Tuesday morning, 77.1 percent have topped expectations.

After climbing above USD 75 a barrel to their highest since November 2014, Brent crude oil prices, the global benchmark, and US crude prices were lower as concerns over the possibility that the United States might reinstate sanctions against Iran faded.

US crude settled down 1.37 percent at USD 67.70 per barrel and Brent was last at USD 73.86, down 1.14 percent on the day.

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