U.S. stocks slide, gold rises on crisis jitters

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks cratered on Tuesday and gold prices soared as moves by European and U.S. central bankers to implement emergency measures to shore up the financial system failed to stave off panic that a deep recession is looming.

A more than 500-point decline in the Dow Jones industrial average capped the biggest five-day point loss ever for the blue chip index.

The sharpening stock market losses renewed the bid for safe-haven securities, with the price of U.S. government debt paring or erasing losses.

Federal Reserve Chairman Ben Bernanke, in a dramatic shift to support the battered economy, signaled a readiness to cut interest rates and the Fed stepped forward as a commercial lender of last resort.

But investors sought a concerted global effort to stem the growing financial crisis. Earlier, European shares closed modestly lower on disappointment about the lack of a coordinated push by the world's leading central banks to cut interest rates.

Banking stocks were slammed on both sides of the Atlantic.

The price of spot gold soared 3.4 percent, while in euro terms gold rose to an all-time high, Reuters data showed, spurred by buying of the traditional safe-haven.

The International Monetary Fund also urged a more coherent and coordinated set of global policies to calm market jitters. The IMF increased its expectations of worldwide credit losses to $1.4 trillion, almost a 50 percent increase from April.

"What's happening in financial markets is quite unprecedented and we are in favor of concerted and coordinated action," Jaime Caruana, director of the IMF's monetary and capital markets division, told reporters in Washington.

The Dow Jones industrial average .DJI closed down 146.71 points, or 1.47 percent, at 9,808.79. The Standard & Poor's 500 Index .SPX lost 18.10 points, or 1.71 percent, at 1,038.79. The Nasdaq Composite Index .IXIC fell 36.83 points, or 1.98 percent, at 1,826.13.

The five-day slide through Tuesday has sliced 1,400 points off the Dow, the biggest cumulative point loss on record for the iconic barometer of U.S. equity markets, Reuters data shows.

"The market can't seem to find a footing, no matter what the government or the Fed tells them," said Linda Duessel, market strategist at Federated Investors in Pittsburgh.

"We've all been shellshocked by the momentum on the downside in this market, and now people are talking about a long and deep recession -- just a month ago many thought a recession could be averted."

The S&P financial index .GSPF slid 11.5 percent as shares of Bank of America (BAC.N) skidded 26.2 percent a day after the bank announced a plan to raise as much as $10 billion to shore up its capital. Fears that other banks may also need to raise capital weighed on the sector.

Iceland took over its second-largest bank and propped up a battered currency, while Russia negotiated an emergency bailout for Iceland and unveiled an aid package for its own banks.