US stocks gave up some of last week's gains as new worries arose about Europe's bank stress tests, ending a four-day rally that had boosted blue chip shares.The Wall Street Journal reported the stress tests didn't provide as transparent a picture of gover
US stocks gave up some of last week's gains as new worries arose about Europe's bank stress tests, ending a four-day rally that had boosted blue chip shares.
The Wall Street Journal reported the stress tests didn't provide as transparent a picture of government debt holdings among major banks as initially thought.
The story also contributed to a sharp drop in the euro, lifted German Bund prices and increased "peripheral" European bond-yield spreads over Bunds.
Gold prices also hit a record of $US1257.30 an ounce.
At Wall Street's close, the Dow Jones Industrial Average slumped 106.56 points, or 1.0%, to 10,341.37, moving back into the red for the year after the index last week had edged into positive territory for 2010.
Financial components led the drop. American Express was down 3.4%, JP Morgan Chase off 2.1% and Bank of America down 1.4%.
The Nasdaq Composite slumped 1.1% to 2208.89 and the S&P 500 also dropped 1.1% to 1091.82. All 10 of its sectors were in negative territory, with financials, consumer-discretionary and energy stocks leading the drop.
Other markets: Europe down, Asia mixed
European stocks closed lower, with banking stocks leading the losses after more questions were raised about bank stress tests.
The Stoxx Europe 600 banks index fell 1.3% to 217.92. In addition to the renewed banking concerns, Germany's economy showed signs of slowing as factory orders dropped in July.
Deutsche Bank fell 1.7% in Frankfurt and Royal Bank of Scotland dropped 1.8% in London. BNP Paribas slid 2.2% and Société Générale declined 3.8% in Paris.
The Stoxx Europe 600 index ended off 0.5% at 259.76. The UK's FTSE 100 closed down 0.6% at 5407.82, snapping a seven-day winning streak.
Germany's DAX lost 0.6% to 6117.89, while France's CAC-40 finished 1.1% lower at 3643.81, after five consecutive days of gains.
Asia markets were mixed. Exporters helped Japanese shares snap a four-day rally on renewed worries about the yen's strength, while steelmakers climbed around the region on expectations of higher Chinese prices.
The Nikkei Stock Average dropped 0.8% to 9226, while China's Shanghai Composite Index inched up 0.1% to 2698.36.
Korea's Kospi lost 0.3% to 1787.74, Hong Kong's Hang Seng Index added 0.2% to 21401.79 and India's Sensex rose 0.5% to 18645.06.
Commodities: Oil down, gold up
Crude oil futures fell after a long holiday weekend in the US, as equities opened lower and the dollar gained strength. Light, sweet crude for October delivery traded $US1.14, or 1.5%, lower at $US73.46 a barrel in New York. Brent crude on the ICE futures exchange traded 23USc down at $US76.64 a barrel.
Gold futures hit a record. The closest contract for September delivery ended $US8.10 higher at $US1257.30 an ounce, topping its record settlement by 10USc.
The most actively traded contract, for December delivery, rose $US8.20, or 0.7%, to settle at $US1259.30 an ounce in New York. Gold prices have risen 15% this year.
Currencies: Dollar rebounds, euro falls
The dollar weakened against the yen but rose against the euro as investors scurried to the perceived safety of the yen and Swiss franc.
The dollar touched a fresh 15-year low of ¥83.51 when investors felt they had a green light from the Bank of Japan to boost the Japanese currency.
The euro plunged more than 1% against the dollar, yen and franc.. The euro hit a fresh all-time low against the franc after the report that European bank stress tests underestimated the exposure of some major banks to sovereign debt.
The euro slid as far as 1.2844 Swiss francs, below the August 31 record low of 1.2850 francs.
The dollar had come under renewed selling pressure early in the global session after remarks from Bank of Japan governor Masaaki Shirakawa that appeared to rule out direct intervention to stop the yen's near-term advance.
The euro was at $US1.2721 compared with $US1.2875 late on Monday. The dollar weakened to ¥83.69 from ¥84.22. The euro slumped to ¥106.46 from ¥108.87.
The UK pound weakened to $US1.5317 from $US1.5397, after falling below $US1.53 for the first time since late July. The dollar was flat at 1.0124 francs from 1.0126 francs.
