NEW YORK, New York - U.S. stocks fell heavily Monday before recovering towards the close. Investors fretted about U.S. Treasury yields as the 10-year note hit an interest rate high of 1.80 percent.

"We think that the increase in long-dated Treasury yields has further to run," =Nicholas Farr, an economist at Capital Economics told Reuters Monday.

"Markets may still be underestimating how far the federal funds rate will rise in the next few years, so our forecast is for the 10-year yield to rise by around another 50 basis points, to 2.25%, by the end of 2023."

The Nasdaq Composite which was down more than two percent earlier in the day recovered to trade ahead 6.93 points or 0.05 percent, to close Monday at 14,942.83.

The Standard and Poor's 500 edged down 6.74 points or 0.14 percent to 4,670.29.

The Dow Jones industrials fell 162.79 points or 0.45 percent to 36,068.87.

The U.S. dollar rose, with the euro slumping to 1.1330 by the New York close Monday. The British pound edged lower to 1.3578. The Swiss franc dropped to 0.9271.

The Canadian dollar was little changed at 1.2676. The Australian and New Zealand dollars were a fraction lower at 0.7174 and 0.6758 respectively. The Japanese yen went against the trend, strengthening to 115.20.

British and European stocks ended lower as the main indices closed while Wall Street was notching up sharp falls.

In Germany, the Dax closed 1.13 percent lower Monday. The CAC 40 in Paris, France shed 1.44 percent. In London, the FTSE 100 lost 0.53 percent.

On Asian markets, in Japan, the Nikkei 225 closed Monday with a minor loss of 9.34 points or 0.03 percent at 28,478.56.

The Australian All Ordinaries slipped 8.30 points or 0.11 percent to 7,766.10.

China's Shanghai Composite edged up 13.98 points or 0.39 percent to 3,593.52.

The Hang Seng in Hong Kong traded 253.16 points or 1.08 percent higher, to close Monday at 23,746.54.