Monday, October 3, 2011

Stocks plunge on Greek default fears

US stocks slumped in heavy volume to a 13-month low on Monday as investors dumped bank shares on fears that Greece's worsening financial crisis could cause a large European lender to fail.

Investors pegged losses to the sharp fall in Franco-Belgian financial group Dexia, which fell 10 percent after a Moody's warning about its liquidity due to concerns about exposure to Greece.

The Dow Jones industrial average dropped 258.08 points, or 2.36 percent, to 10,655.30. The S&P 500 fell 32.19 points, or 2.85 percent, to 1,099.23. The Nasdaq Composite lost 79.57 points, or 3.29 percent, to 2,335.83.

The S&P 500 closed at its lowest level since Sept. 8, 2010.

European shares ended at their lowest close in a week, after Greece fuelled concern about a possible default when saying it will miss deficit targets for this year.

Banks were among the worst hit stocks, on worries they may have to make further writedowns on Greek debt holdings. The STOXX Europe 600 Banking Index fell 2.8 percent.

The FTSEurofirst 300 index of top European shares fell 1.2 percent to 912.26 points, the lowest close since Sept. 26. Volume was 75 percent of the index's 90-day average.

The index lost 17 percent in the third quarter, its biggest quarterly fall since 2008.

The Nikkei average dropped 1.8 percent, as fears of slowing global growth and the spreading impact of Europe's credit woes encouraged investors to pull funds out of risk assets.

The Nikkei ended down 1.8 percent at 8,545.48, after falling as far as 8,455.67. The benchmark gained 1.6 percent last week but lost 2.8 percent for the month and 11.4 percent for the quarter, turning in its worst quarterly performance since June 2010. But it remained above its two-and-a-half-year closing low of 8,374.13, set on Sept. 26.