| NEW YORK
NEW YORK Global stock markets fell on Tuesday on worries of the European debt crisis worsening, while the Swiss central bank's bold move to slow the safe-haven rush into its currency caused a record 10 percent drop of the franc versus the euro.
Nervous investors channeled cash into less-risky assets as doubts resurfaced over Italian and Greek willingness to implement tough budget and debt measures demanded by other euro zone members, while Germany hardened its stand against giving more aid.
"Europe is where you have to be focused right now, and Europe doesn't look good," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
Wall Street stocks, after losing more than 2 percent earlier in the session, ended down less than 1 percent after a three-day holiday weekend, with Friday's U.S. jobs report, which showed zero net jobs growth, also hurting investor confidence.
The Swiss central bank set a limit of 1.20 francs to the euro in an attempt to keep the currency's strength from hurting exports. Global investors have poured money into the Swiss franc seeking a relatively safe asset.
The move led to some selling of gold after it touched a record high above $1,900 an ounce.
U.S. and German government debt, perceived as safer assets, along with gold amid the turmoil, rallied and pushed benchmark yields to historic lows.
The Dow Jones industrial average .DJI ended down 100.96 points, or 0.90 percent, at 11,139.30. The Standard & Poor's 500 Index .SPX lost 8.73 points, or 0.74 percent, at 1,165.24. The Nasdaq Composite Index .IXIC was down 6.50 points, or 0.26 percent, at 2,473.83.
The pan-European FTSEurofirst 300 .FTEU3 closed down 0.7 percent after falling more than 4 percent on Monday on renewed worries about Europe's ability to solve its debt problems.
U.S. and European equities pared their losses after a report showed growth in the U.S. services sector unexpectedly improved in August.
This snapshot soothed some worries that the world's biggest economy is on the brink of recession, but not enough to scale back expectations the Federal Reserve would engage in another round of monetary stimulus to boost sluggish U.S. growth.
Policymakers on both sides of the Atlantic are struggling to come up with economic fixes, as citizens and investors are growing disillusioned over any stimulus programs and/or austerity measures to create jobs and solve the public debt crisis.
President Barack Obama will announce his jobs program on Thursday, while G7 finance ministers and central bankers will convene in Marseilles, France starting on Friday.
"The market is looking at these problems soberly and I think it's telling us that it's not confident there are any silver bullets to (solve) these problems," said Lou Brien, market strategist at DRW Trading in Chicago.
World stocks as measured by MSCI .MIWO00000PUS fell 1 percent, while Japan's Nikkei .N225 closed off 2.2 percent.
After the Swiss National Bank announcement, the euro was trading at just above the central bank's new target of 1.20 Swiss francs after trading near 1.10 francs. It fell to a record low 1.0075 on August 9.
The euro touched an eight-week low against the dollar and was last trading at $1.3991.
Ten-year German and U.S. government debt yields stayed near historic lows below 2 percent, signaling that the intensive search for safety was continuing.
The Swiss central bank's move rocked a number of other assets, notably gold. It lost some allure to trade at $1,875 an ounce after touching a record high at $1,920.
In the oil market, U.S. crude futures for October delivery settled down 43 cents at $86.02 a barrel after touching a session low of $83.20.
(Reporting by Ed Krudy, Emily Flitter, Gertrude Chavez-Dreyfuss, Barani Krishnan and Gene Ramos in New York and Amanda Cooper in London; Editing by Dan Grebler)