Stocks on Wall Street continued to come under pressure, led by financial and technology companies, amid reports that Germany is banning certain types of bearish investments.
The reports said Germany would ban naked short-selling of stocks and bonds, which differs from normal short selling in that the sold secutities aren't borrowed in advance.
The practice came under fire at the height of Greece's struggle to refinance its debt, with many euro-zone governments saying such transactions in credit-default swaps artificially inflated funding costs.
Adding to European woes for investors, the euro sank to a four-year low of around $US1.20.
The Dow Jones Industrial Average, which swung between gains and losses earlier in the session, closed 114.88 points, or 1.1%, at 10,510.95. The Nasdaq Composite Index finished 1.6% down at 2317.26, while the SP 500 was down 1.4% at 1120.80.
Other markets: Europe, Asia up
European stock markets closed higher, with energy and basic resource stocks rebounding as commodity prices bounced back.
Commodity stocks were stronger, with both copper and crude-oil prices rising on a softer dollar, which in turn lifted both mining and energy stocks.
The pan-European Stoxx 600 index for basic resources rose 1.9%, while the index for oil & gas stocks added 1.3%. Overall, the pan-European Stoxx 600 index closed 1.3% higher at 251.30.
The UK's FTSE 100 ended 0.8% higher at 5307.34. France's CAC-40 was up 2.1% at 3617.32, and Germany's DAX added 1.5% to 6155.93.
For the rest of Europe, the ASE in Athens was down 0.3% at 1629.24, but the IBEX 35 in Madrid advanced 3.6% at 9627.60.
Asian markets ended mostly higher, with banking and property stocks fronting gains in Hong Kong and Shanghai.
China's Shanghai Composite, which plunged 5.1% in the previous session, erased early losses to finish 1.4% higher at 2594.78.
Hong Kong's Hang Seng Index gaining 1.2% to 19944.94. Japan's Nikkei Stock Average edged 0.1% higher to 10242.64. Most other major Asian indexes gained less than 1%.
Commodities: Oil, gold down
A early strong rebound in crude oil futures prices faltered late in the session, as equities prices sold off and the euro slid to a fresh session low against the dollar.
Light, sweet crude oil futures for June delivery in New York tumbled from a session high of $US72.52 a barrel to a trade at low of $US69.87 a barrel, down 21USc on the previous day.
Crude oil futures have been battered in recent weeks by worries over euro-zone debt problems and rising oil inventories that more than match demand. Since an 18-month high of $US87.15 a barrel on May 3, prices have nose-dived 20.5%, or nearly $US18 a barrel, to Monday's low of $US69.27 a barrel.
Gold futures fell sharply though the longer-term outlook for gold remains bullish as long as European nations are grappling with their debt issues.
Gold for June delivery in New York was down $US14.20, or 1.2%, to $US1213.90 an ounce.
Currencies: Euro down
The euro continued to fall against the dollar and yen, giving up earlier gains, after news that Germany would support a tax on the financial-market sector to help contribute to the costs of the euro-zone sovereign-debt rescue plan.
The euro hit a four-year low of $US1.2161 from $US1.2384 late on Monday, and was at ¥113.57 from ¥114.33.
The dollar was at ¥92.44 from ¥92.52. yen and the pound was at $US1.4406 from $US1.4477.
Wed, 19 May 2010