NEW YORK, New York - U.S. stocks tumbled on Thursday as U.S. Treasury yields rose. sparking inflationary fears.

Technology stocks took the brunt of the selling with the key Nasdaq Composite falling nearly 500 points.

"Rates matter," Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia told Reuters Thomson Thursday.

"There's no capital risk with a 10-year," he said. "You'll get your principle back and all of a sudden it's competitive with stocks."

Investors are taking profits in the high-flying tech sector and moving into more conservative bonds with their rising yields, Jeffrey Carbone, managing partner at Cornerstone Wealth in Huntersville, North Carolina told Reuters Thomson.

"The market is starting to get a bit frothy," Carbone added. "The higher the yield on bonds, the more we see this push to move out of stocks."

The Nasdaq Composite led the way Thursday with a 478.54 points or 3.52 percent scalping, to end the day at 13,119.43.

The Dow Jones dived 559.85 points or 1.75 percent to 31,402.01.

The Standard and Poor's 500 dropped 96.10 points or 2.45 percent to 3,829.33.

The U.S. dollar rallied across a range of currencies. Against the euro however it made little ground. the EU unit last traded ta 1.2167 around the New York close Thursday. The British pound fell sharply to 1.4007. The Japanese yen was sold off to 106.24. The Swiss franc nudged a little higher to 0.9059.

The Australian dollar fell form a multi-year high above 0.80 cents to finish the day around 0.7869. The Canadian dollar softened to 1.2609. The New Zealand dollar dropped sharply to 0.7374.

European markets, which had been in positive territory, turned down as U.S. stocks fell. In London the FTSE 100 ended the day down 0.11 percent. The German Dax slid 0.69 percent. The Paris-based CAC 40 was off 0.24 percent.

On Asian markets, in Tokyo, the Nikkei 225 jumped 496.57 points or 1.67 percent to 30,168.27.

The Australian All Ordinaries gained 56.30 points or 0.80 points to 7,105.70.

In Hong Kong, the Hang Seng surged 355.93 points or 1.20 percent to close at 30,074.17.

China's Shanghai Composite advanced 20.97 points or 0.59 percent to 3,585.05.