Stocks fall again as global gyrations continue

Stocks on Wall Street slumped again as rumours of further downgrades in Europe swept world markets.

Banks stocks in particular were hit as investors weighed the US Federal Reserve's gloomy economic outlook against hints of further actions.

In Europe sharemarkets reversed earlier gains in a third day of wild gyrations since Standard & Poor’s downgraded US government debt late last week.

Since then the Fed has confirmed the weak US growth outlook and the focusd on further downgrades resulting from eurozone debt woes, with France pinpointed as next on the list.

Amid the volatility, gold futures jumped as high as $US1800 an ounce while crude-oil futures were above $US80 a barrel.

At the Wall Street close (8am NZ time), the Dow Jones Industrial Average had plunged 519.98 points, or 4.6%, to 10,719.79, more than erasing Tuesday's jump of 429 points.

The S&P 500 index finished 4.4% lower at 1120.67 and the Nasdaq Composite lost 4.1% to 2381.05.

All 30 of the Dow components and all 10 of the S&P 500 sectors are in negative territory, with just a handful of S&P 500 components rising.

Leading the declines were financial stocks, with Bank of America off 10.7%, JP Morgan Chase down 5.5% and American Express shedding 7.1%.

Walt Disney was the steepest non-bank decliner among the Dow components, tumbling 9.1% after it reported results that topped analyst expectations but raised concerns about decelerating advertising rate growth.

Other markets: Europe down, Asia up
European stocks fell broadly as worries continued to surround Italian and Spanish government bonds as well as some banks.

In Italy, a number of stocks were halted as its FTSE MIB tumbled 6.7% to lead the major market declines.

French-listed bank shares fell the most: Société Générale tumbled 15%, Crédit Agricole shed 12% and BNP Paribas lost 9.5%.

The Stoxx Europe 600 index closed down 3.7% at a two-year low of 223.50.

The UK's FTSE 100 lost 3.1% at 5007.16, Germany's DAX plummeted 5.1% at 5613.42 and the CAC-40 in Paris was 5.5% lower at 3002.99, its lowest close since July 2009.

In Asia, Hong Kong's Hang Seng Index climbed 2.3% to 19,783.67 after contracting nearly 15% over the past six days, while Korea's Kospi rose 0.3% to 1806.24.

Taiwan's Taiex gained 3.3% to 7736.32. All three indexes are still down more than 10% so far in August.

Japan's Nikkei Stock Average ended the day 1.1% higher at 9038.74 while China's Shanghai Composite finished 0.9% higher at 2549.18.

Australia's S&P/ASX 200 index rose 2.6% to close at 4141.3.

Commodities: Oil rises, gold hits $US1800
Crude futures shrugged off a broader market decline, as a government report suggested better-than-expected oil demand last week.

Light, sweet crude for September delivery was up $US1.37, or 1.7%, to $US80.67 a barrel in New York. Brent crude on ICE Futures Europe was up $2.06, or 2%, to $104.63 a barrel.

Gold surged above $US1800 an ounce as concerns that France might face a credit downgrade sent stocks lower.

The contract for August delivery settled up $US41.30, or 2.4%, at $US1784.30 an ounce in New York. The contract rose as high as $US1795.60.

Gold for December delivery, the most actively traded contract, touched an intraday record of $US1801.

Currencies: Euro drops to $US1.41
Concerns about Europe's debt crisis taking a turn for the worse hit the euro hard. It fell as low as $US1.4167, down 1.5% on the session, from $US1.4376 late on Tuesday. It is now trading at $US1.4187.

The dollar was at ¥76.43 compared with ¥76.96, while the euro was at ¥108.52 from ¥110.55.

The pound was at $1.6177 from $1.6316, while the dollar bought 0.7297 Swiss franc from 0.7206 franc.