NEW YORK,  United States — INTEREST rates fell sharply in the bond market yesterday as investors sought safety from growing concerns about a global economic slowdown and tensions between North and South Korea.

Yields on the 10-year note and 30-year bond, which are often used as benchmarks for interest rates on consumer loans, both hit their lowest levels of the year.

Investors remain concerned that Europe’s mounting debt problems and cost-cutting measures could lead to a second recession on the continent and slow economic growth globally. European leaders have warned that countries must work to stimulate the economy or face a long period with little expansion.

Meanwhile, tensions were climbing on the Korean peninsula as North Korea’s leader Kim Jong II ordered his military to combat alert.

The yield on the 10-year note fell to 3.14 per cent yesterday from 3.20 per cent late Monday. Earlier in the day, it fell as low as 3.07 per cent, its lowest level since April 2009. That previous low came a few weeks after the stock market bottomed at a 12-year low.

Stocks plunged around the world Tuesday, with the Dow Jones industrial average falling nearly 200 points.

The price of the 10-year note that matures in May 2020 rose 56.25 cents to US$103.09375.

The yield on the 30-year bond fell below four per cent yesterday for the first time since briefly touching that level last October. Its yield fell as low as 3.97 per cent before climbing back to 4.03 per cent in midday trading.

The price of the 30-year bond that matures in May 2040 rose 87.5 cents to US$105.875.