NEW YORK Wall Street stocks and the euro fell on Monday, while gold prices climbed to a new record high, on fears the debt problems in Europe and the United States may spiral into a global crisis.
Stress tests for euro zone banks released on Friday failed to stem the anxiety about a potential Greek sovereign debt default.
In the United States, as the clock ticks down to the August 2 deadline for an increase in the statutory $14.3 trillion borrowing limit, investors were nervous about the stalemate in Washington.
The lack of progress in negotiating a U.S. fiscal package has already led to two ratings agencies to warn of a credit rating downgrade. Such a move, some traders fear, could send interest rates soaring and erode the U.S. dollar's reserve currency status.
"There's a perfect storm happening on a global macroeconomic basis with no debt deal here and the ongoing issues in Europe, and the market is looking at all these things and is fairly anxious," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.
The Dow Jones industrial average .DJI was down 63.73 points, or 0.51 percent, at 12,416.00. The Standard & Poor's 500 Index .SPX was down 5.18 points, or 0.39 percent, at 1,310.96. The Nasdaq Composite Index .IXIC was down 8.12 points, or 0.29 percent, at 2,781.68. See .N
European stocks .FTEU3 lost more than 1.0 percent on the day, while the MSCI world equity index .MIWD00000PUS fell 0.8 percent.
In the currency market, the euro was down 0.8 percent versus the dollar and the yen at $1.4030 and 111.06 yen, respectively.
With fears growing that the debt crisis could spread to Italy or Spain, the euro zone's third and fourth largest economies, Spanish 10-year government bond yields rose to 6.36 percent, their highest since the introduction of the euro. The Italian equivalent also rose above 6.0 percent.
As worries over fiscal burdens persist, investors have been scrambling to shelter their money in cash, gold, the Swiss franc and other less risky investments.
Spot gold rose to an all-time peak above $1,600 an ounce after rising more than 3.0 percent for a second straight week last week, a feat it has not achieved since February 2009.
The safe-haven Swiss franc hit record highs against the dollar and euro.
Europe's debt crisis stoked a mild bid for U.S. government debt, but Washington's stalemate to raise the debt ceiling has limited the appetite for Treasuries.
Prices on the benchmark 10-year Treasury note was up 2/32 for a yield of 2.90 percent, down 1 basis point from late Friday.