* Bank nationalization fear grips market
* Bank of America, Citigroup lead financial sell-off
* Dow and S&P 500 down 1 pct; Nasdaq off 0.4 pct
* For up-to-the-minute market news, click [STXNEWS/US]
(Updates to early morning)
By Ellis Mnyandu
NEW YORK, Feb 20 U.S. stocks tumbled on Friday,
depressing the Dow to levels last seen more than six years ago
as investors worried a financial sector rescue might involve
nationalization of major banks, wiping out shareholders.
The mounting fear sent investors scurrying to the relative
safety of U.S. government bonds US10YT=RR and gold XAU=,
which rose above $1,000 an ounce.
Shares of Bank of America (BAC.N) tumbled more than 15
percent to $3.35, while Citigroup (C.N) slid more than 18
percent to $2.06. For a moment after the market open, Citi
traded below $2, contributing to a 4.8 percent drop in the KBW
Banks index .BKX.
"There's a lack of confidence in the government to get us
out of this and that has people sitting on their hands and not
willing to buy," said Matt McCall, president of Penn Financial
Group in Ridgewood, New Jersey. "There's that fear that we
nationalize banks and this market gets killed."
The Dow Jones industrial average .DJI fell 87.53 points,
or 1.17 percent, to 7,378.42. The Standard & Poor's 500 Index
.SPX declined 8.59 points, or 1.10 percent, to 770.35. The
Nasdaq Composite Index .IXIC lost 4.98 points, or 0.35
percent, to 1,437.84.
After the Dow broke its November lows on Thursday to hit
fresh bear market lows, investors are worried that its breach
suggests the benchmark S&P 500 .SPX may not be far from
violating three-month lows as the gloom persists, and a retest
of levels not seen since 1997 may be looming.
(Editing by James Dalgleish)