Bank stocks lead Wall Street lower

Stocks on Wall Street fell as worries about the stalemate in US debt-ceiling negotiations and continued euro debt issues sparked a selloff.

Investors seeking safety pushed gold above $US1600 for the first time.

The Dow Jones Industrial Average was down 94.57 points, or 0.8%, to 12,385.16 at the close (8am NZ time). Banks lead the losers, with Bank of America plunging 3.7%.

Boeing dropped 2.9%, while Alcoa and Caterpillar were also weak, shedding 2.3% and 2.1% respectively.

The S&P 500 index was down 0.8% to 1305.44, with all sectors in the red. The Nasdaq Composite Index slumped 1.0% to 2764.62.

Other markets: Bank shares slump in Europe, Asia also down
European stock markets slumped, with banks falling sharply as sovereign-debt worries added to the selling pressure.

The Stoxx Europe 600 index fell 1.8% to a 2011 closing low of 262.10, in the first session since last week's 2.5% loss, the worst weekly performance since the week ended March 18.

The UK FTSE 100 index fell 1.6% to 5752.81. Royal Bank of Scotland Group fell 6%, Barclays shed 7% and Lloyds Banking Group sank 7.5%.

The French CAC 40 index fell 2% at 3650.71, with Société Générale sinking 5.5% and BNP Paribas dropping 3.6%. Insurer AXA fell 5.4%.

The German DAX 30 index shed 1.6% to 7107.92.

Asian stock markets ended mostly lower.

Hong Kong's Hang Seng Index ended 0.3% down at 21804.75, China's Shanghai Composite Index slipped 0.1% to 2816.69 and Australia's S&P/ASX 200 index was little changed at 4472.0.

Korea's Kospi fell 0.7% to 2130.48, Taiwan's main index gave up 0.4% to 8538.57 and India's Sensex fell 0.3% to 18,507.04. Japanese markets were closed for a holiday.

Commodities: Oil down, gold passes $US1600
Oil futures fell below $US95 a barrel as the US dollar vaulted against the euro on worries about Europe's debt crisis.

Light, sweet crude for August delivery fell $US2.51, or 2.6%, to $US94.73 a barrel in New York. Brent crude on ICE Futures Europe exchange traded down $US1.97, or 1.7%, to $US115.29 a barrel.

Gold’s most actively traded contract, for August delivery, gained $US12.30, or 0.8%, to settle at $US1602.40 an ounce in New York.

July-delivery gold rallied $US12.30, or 0.8%, to settle at $US1602.10 an ounce.

Gold futures have marched higher for 10 consecutive trading days as investors stocked up on the refuge asset amid escalating concerns about government debt.

Currencies: Tensions test euro
Investors sold the euro amid continued concerns about the EU debt crisis and risks that it will spread to more members.

Markets also were still digesting the details of Friday's European bank stress-test results, which did little to boost confidence in the European banking system's ability to withstand a government default.

Though only nine banks failed out of 90 top lenders, markets largely interpreted the tests's parameters as not being strict enough, analysts said.

Meanwhile, the debate about raising the US debt ceiling limit kept investors wary of the dollar as well, keeping the euro above $US1.40.

The euro traded at $US1.4061, down from $US1.4157 late on Friday in New York. The US dollar was at ¥79.09 from ¥79.12, while the euro drifted to ¥111.21 from ¥112.01.

The UK pound weakened to $US1.6027 from $US1.6134. The dollar strengthened to 0.8181 Swiss franc from 0.8149 franc after sliding to 0.8034 franc earlier in the day.

The euro traded at 1.1503 francs, down from 1.1537 francs late on Friday. It slid to 1.1365 francs earlier in the day.