Global stocks worldwide, oil fall as crisis fears widen

By Herbert Lash

NEW YORK (Reuters) - Fear gripped investors around the world on Monday, causing them to dump stocks and snap up safe-havens after European leaders were seen doing too little too late to stem a spreading financial crisis that threatens global growth.

European shares posted their worst day on record and the Dow slipped below 10,000 points for the first time since October 2004 as markets reeled on credit jitters and fears of the fallout from a potential global recession, following the emergency rescue of two big European banks and a move by several European governments to guarantee bank deposits.

Stocks slumped throughout Asia and Latin America, with trading halted on both the Brazilian and Russian markets because of steep plunges in stock prices.

"People have decided that markets have no ability to repair themselves and politicians have control of this process," said John Haynes, strategist at Rensburg Sheppard Investment Management in London. "The buyers have stepped away, and the sellers are still there."

Contagion from the credit crisis spread in Europe, gumming up interbank money markets as banks remained reluctant to lend to each other and investors fled to the safety of bonds.

Euro zone government debt prices shot to 6-1/2 month highs and U.S. Treasuries surged amid mounting worries about the impact of the world's deepest financial crisis in 80 years.

Fears of a global slowdown hammered prices for industrial metals, with benchmark copper tumbling almost 8 percent, and aluminum and zinc prices falling by almost 5 percent.

Crude oil prices fell below $90 a barrel to an eight-month low on fears of a global slowdown, before paring losses. Gold futures jumped more than 5 percent and the yen soared across the board amid heavy selling of riskier positions.

Before 1 p.m., the Dow Jones industrial average .DJI was down 557.61 points, or 5.40 percent, at 9,767.77. The Standard & Poor's 500 Index .SPX was down 66.37 points, or 6.04 percent, at 1,032.86. The Nasdaq Composite Index .IXIC was down 122.65 points, or 6.30 percent, at 1,824.74.

"What we're seeing here is a complete global crisis. We're seeing a complete deleveraging and that is what's taking us down further," said Anthony Conroy, head trader for BNY ConvergEx, an affiliate of the Bank of New York, in New York.

Shares of energy companies were a top drag as crude oil prices slid, with the S&P energy .GSPE index down more than 7 percent. Shares of Exxon Mobil Corp (XOM.N) fell 2 percent to $76.36, while shares of Chevron Corp (CVX.N) tumbled more than 5 percent to $75.43.

Shares of economic bellwethers, including General Electric (GE.N) were also pummeled. Shares of GE, a diversified manufacturer whose businesses include a large finance arm, dropped 3.6 percent to $20.81.

In Europe, the pan-European FTSEurofirst 300 index .FTEU3 fell 7.75 percent to close at 1,004.90 points, its biggest percentage fall ever and eclipsing the 6.3 percent fall suffered on September 11, 2001, during the U.S. terrorist attacks.

Banks and commodity shares took most points off the index, with Royal Bank of Scotland (RBS.L) -- which suffered a credit rating cut from Standard & Poor's -- sliding 20 percent, Barclays (BARC.L) losing 14.7 percent and UBS (UBSN.VX) falling 12.8 percent.

"This is a stampede," said Valerie Plagnol, chief strategist at CM-CIC Securities in Paris.