BIS warns of mounting disconnect between debt and stock markets

The Bank for International Settlements (BIS) has warned that record global share prices appear increasingly disconnected from the rising concerns about government debt levels in the bond markets.

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The BIS, which acts as an umbrella group for the world's central banks, said the rise in the premium investors demand to buy the 30-year debt of top economies this year showed "mounting concerns about the fiscal outlook."

Earlier this year Moody's became the last of the main credit rating agencies to strip the United States of triple A status, while France on Friday had its rating cut to its lowest ever level by Fitch over concerns about government finances.

"This is a time to be watchful of potential amplification channels that could propagate stress," the head of the BIS' Monetary and Economic Department Hyun Song Shin said, adding that the elevated valuations of risky assets leave them vulnerable.