(9.30am market close) Turmoil in the auto industry and continued worry about the financial sector hammered stocks on Wall Street, further eroding the market's upswing of recent weeks.

The Dow Jones Industrial Average fell 254.16 points, or 3.3%, to 7522.02. All of its components declined. GM shares shed 25% to their lowest levels in decades.

The Obama administration has forced out GM chief executive Rick Wagoner and says GM and Chrysler must survive without becoming “wards of the state.” The companies have been given one last, limited chance to “fundamentally restructure” or face bankruptcy.

Meanwhile, Treasury Secretary Timothy Geithner has signalled some banks are still ailing and will need further aid from the government.

The S&P 500 fell 28.40 points, or 3.5%, to 787.54, dragged down by a 6.6% decline in its financial sector. Bank of America, Citigroup and JP Morgan Chase have tumbled at least 8%. Goldman Sachs is down 5% and Morgan Stanley is off 8%.

Canadian stocks fell the most for four weeks on US banking concerns and as oil’s retreat pushed energy producers lower.

Royal Bank of Canada, Toronto-Dominion Bank and Manulife all declined more than 4%. Suncor Energy and EnCana dropped at least 3%.

The S&P/TSX Composite Index decreased 347.37 points, or 3.9%, to 8473.69.

European stocks fell the most in four weeks. Deutsche Bank and BNP Paribas slumped at least 9% while Daimler AG and PSA Peugeot Citroen dropped more than 9%. BHP Billiton led declines among commodity producers as oil and metals slid.

The Dow Jones Stoxx 600 Index slipped 3.8% to 170.45, the biggest drop since March 2. National benchmark indexes slipped in all of the 18 western European markets.

UK stocks fell, sending the FTSE 100 Index to its biggest drop in four weeks as lower commodities prices weighed on mining and oil shares.

Barclays slid 14% as Societé Generale said the French government could end up owning as much as 67 percent of the lender as it recommended selling the shares. BP and Royal Dutch Shell retreated with crude oil prices.

The FTSE 100 sank 135.94, or 3.5%, to 3762.91, the biggest loss since March 2.

German stocks tumbled, sending the DAX Index to its steepest loss this year. BMW and Daimler, the world’s biggest makers of luxury cars, fell more than 7%.

The benchmark DAX Index slid the most since December 1, losing 5.1% to 3989.23 and trimming the monthly advance so far to 3.8%.

France’s CAC 40 tumbled 121.28, or 4.3%, to 2719.34,

Commodities: Oil, gold fall

Crude oil fell below $US50 a barrel as tumbling equity markets signalled that the recession in major energy-consuming countries may deepen, curbing fuel demand.

Oil fell as much as 6.2% while the dollar strengthened to its highest level against the euro in more than a week, limiting the appeal of commodities as an alternative investment.

Crude oil for May delivery fell $US3.12, or 6%, to $US49.26 a barrel in New York. Futures touched $US49.15, the lowest since March 19. Prices are up 10 percent this year.

Gold fell for a second day, losing appeal as an alternative investment as the dollar climbed to the highest since March 18 against the euro.

Bullion for immediate delivery slid as much as $US14.01, or 1.5%, to $US909.15 an ounce. t.

June futures fell 1% to $915.80 an ounce in New York.

Currencies: Yen, dollar up

The yen and dollar rose against all of the other major currencies as investors reacted to turmoil in the car industry and concern about future banking bailouts.

Japan’s currency climbed to the highest level versus the euro in two weeks. The yen advanced 1.5% to ¥128.03 per euro and appreciated 0.5% to ¥97.37 per dollar. The dollar strengthened 1.1% to $US1.3147 per euro.

The pound fell against the dollar for a fourth day and also slipped versus the euro. The drop put the pound on course for its third straight quarterly loss, the longest stretch of declines since December 2005.

Sterling dropped 1.2% to $US1.4147, bringing its decline since the end of December to 3%. The British currency weakened 0.2% to 92.97p per euro.

Kiwi, Aussie tipped

Investors are the most bullish on Australian and New Zealand dollars since 2003, anticipating that spending on commodities will increase as central banks print unprecedented amounts of cash to rescue their economies.

Nineteen of the largest developed economies are spending 43% of their average gross domestic product to end the worst economic crisis since the Great Depression, the International Monetary Fund said on March 6, adjusting for cost-of-living variances.

The Group of 20 nations’ debt will jump next year to 77% of GDP, up 11 points from 2008, the IMF report said.

Aberdeen Asset Management, Hermes Pension Management and Kokusai Global Sovereign Open Fund figure that new money will spur demand for everything from iron ore and oil to wool, so they’re buying Aussies, Kiwis and Norwegian kroner.

Options to buy the Australian dollar in the next month cost as much as 0.5975 percentage point more than contracts to sell on March 24, the most since October 2003, according to data compiled by Bloomberg. The so-called risk reversal rate also favoured New Zealand dollar purchases the following day, reaching a six-year high of 0.35.