Euro crisis deepens, sends stocks tumbling

Stocks on Wall Street slumped as investors fear Europe's debt crisis is spiralling out of control.

A panic over Italy's government debt and banking sector triggered a 4% drop in that country's FTSE MIB index, while Italian and Spanish yields jumped to euro-era records.

The Dow Jones Industrial Average dropped 151.44 points, or 1.2%, to 12,505.76 at the close (8am NZ time). The materials and energy sectors fell sharply. Hewlett-Packard fell 3% to lead the Dow losers, while Bank of America fell 2.8% and JP Morgan Chase dropped 2.7%.

The S&P 500 index slid 1.8%, to 1319.49, with all sectors dropping. The Nasdaq Composite tumbled 2.2%, to 2797.58.

Other markets: Europe, Asia down
European stock markets fell sharply, with banking and insurance shares slumping. The Stoxx Europe 600 index shed 1.4% to 269.90.

In Paris, the CAC 40 index fell 2.7% to 3807.51. the DAX 30 index fell 2.3% to 7230.25 in Frankfurt and in London the FTSE 100 index shed 1% to 5929.16,

Hong Kong led most Asian markets lower on concerns about the region's exports after Friday's dismal US jobs report.

Hong Kong's Hang Seng Index lost 1.7% to 22,347.23, its first loss in three sessions. Japan's Nikkei Stock Average shed 0.7% to 10,069.53, Australia's S&P/ASX 200 index fell 1.6% to 4582.30, Korea's Kospi declined 1.1% to 2157.16 and India's Sensex fell 0.7% to 18,721.39.

Commodities: Oil down, gold up
Oil futures declined, weighed down by signs of weak crude demand in the US and China.

Light, sweet crude for August delivery fell $US1.14, or 1.2%, to $US95.06 a barrel in New York. Brent crude on ICE Futures Europe gave up $US2.23, or 1.9%, to $US116.10 a barrel.

Gold rallied alongside other safe-haven assets, hitting a record in euro terms. The most actively traded contract, for August delivery, was up $US4.40, or 0.3%, at $US1546 an ounce in New York after trading as high as $US1557.60 an ounce.

Currencies: Euro plunges as debt fear rises
The euro fell below $US1.40 for the first time since May 23 as fresh fears rose the debt crisis was spreading to Italy and Spain.

The euro also fell below ¥113, to levels last seen in mid-March, and plunged to fresh record lows against the safe-haven Swiss franc.

In New York, the euro recovered some ground to $US1.4032 from $US1.4263 late on Friday and fell to 1.1720 Swiss francs from 1.1915 francs.

It also traded at its lowest levels against the yen since early March to be at ¥112.76 from ¥115.02.

The dollar was at ¥80.38 from ¥80.64, the UK pound was at $US1.5925 from $US1.6053 and the dollar was at 0.8350 Swiss franc from 0.8372 franc.