LONDON—Stock markets were deep in the red and some key government bond yields climbed to their highest in years on Thursday after the Federal Reserve signaled the possibility of faster-than-expected U.S. rate hikes and stimulus withdrawal. Both Asia and Europe’s bourses fell heavily after Wall Street’s tech-heavy Nasdaq plunged more than 3 percent on Wednesday and 2- and 5-year Treasury yields, important drivers of global borrowing costs, surged to post-COVID pandemic highs. Minutes from the Fed’s December meeting had shown that a tight jobs market and unrelenting inflation could require the U.S. central bank to raise rates sooner than expected and begin reducing its overall asset holdings—a process known as quantitative tightening (QT). Early European trading saw the STOXX 600 share index lose 1.3 percent, erasing all of its gains for the year that had sent it to record highs. Asia has seen sharp falls too. Australian shares slid 2.7 …