LONDON The dollar hit a four-month high against the yen and bonds and top emerging market currencies were back under pressure on Tuesday, on bets for higher interest rates in a small but growing group of major economies.

With the expectations fueled by increasingly robust-looking global growth, MSCI’s 46-country All World share index was up for a third day running, although it started to slip as Europe’s bourses lost their footing early on.

They were unsettled as euro zone bond yields resumed their march upwards, having paused on Monday, as the focus shifted back to the pace of monetary tightening in the world’s largest economies.

Janet Yellen starts two days of testimony on Wednesday as the Federal Reserve prepares to unwind the massive hoard of bonds it bought to ease the financial crisis, while top ECB and Bank of England policymakers were speaking in Europe on Tuesday.

Germany’s 10-year yield edged up 2 basis points to 0.56 percent having more than doubled over the last few weeks. The South African rand, Turkish lira and Russia rouble all dropped around 0.8 percent as the emerging market selling resumed too.

Roger Webb, Head of European Credit at Aberdeen Asset Management said the slightly stronger-than-expected global growth numbers had boosted expectations of higher interest rates.

“I think the increased hawkishness we have seen from the central banks has led to a fear that we could see a mini-taper tantrum.”

“I don’t think there is too much alarm. I think the move to slightly higher yields in Europe and the U.S., UK and elsewhere is probably understandable.”

The dollar ground higher against the basket of currencies including hitting a four-month high of 114.43 yen on the back of the past fortnight’s 25 basis-point rise in 10-year U.S. government bond yields.

The New Zealand dollar fell to its lowest since June 23 meanwhile after an earthquake hit the country’s South Island.

The Canadian dollar was down slightly too against its U.S. counterpart as investors awaited a Bank of Canada interest rate decision on Wednesday.

Forecasters are divided on whether the central bank will raise rates, but data from the overnight index swaps market shows that money markets are almost fully priced for an increase, while an 80 percent chance of a second hike has been implied by December.

In commodities, crude oil slipped back after pushing higher overnight in Asia.

Increased drilling activity in the United States and uncertainty over Libyan and Nigerian production cuts clouded the future supply outlook, leaving U.S. crude down a third of a dollar at $44.13 a barrel and Brent at $46.57.

Spot gold edged lower too, dipping to $1,212.13 an ounce and back near a four-month low touched in the previous session.

(Reporting by Marc Jones)