US stocks dip as world markets slump

Stocks on Wall Street dipped near the close after earlier clawing back losses while other world markets continued to slump as the European debt crisis spread to Italy.

Sovereign-debt worries overshadowed hints the US Federal Reserve might consider additional stimulus measures if economic growth falters.

The Dow Jones Industrial Average fell 214 points the previous two sessions, the biggest two-day point drop since June 2.

Prices for Italian and Spanish bonds declined sharply, while investors increased their demand for gold and the Swiss franc. The euro dropped 1.8% to hit a record low against the Swiss franc.

On Wall Street, the Dow was down 58.73 points, or 0.5%, to 12,447.03 at the close (8am NZ time).

The S&P 500 index finished 0.4% down at 1313.63, while the Nasdaq Composite was down 0.6% to 2785.49.

Other markets: Europe, Asia down
European stocks came off its lows as the Italian market pared losses after a broadly successful bond auction.

The Stoxx Europe 600 Index was 1.4% lower at 266.01. London's FTSE 100 fell 1.3% to 5851.92, Frankfurt's DAX was off 1.8% at 7096.94 and Paris' CAC-40 was down 2.4% at 3717.70.

Italy's FTSE MIB index was down just 0.2%, while Greece's ASE Index dropped 2.4%, Spain's IBEX 35 slipped 1% and Portugal's PSI 20 fell 3.1%.

Hong Kong and South Korean stocks tumbled to lead Asian markets lower.

The Hang Seng Index fell 3.1%, its biggest one-day percentage drop since May 2010, to land at to 21,663.16. The Shanghai Composite dropped 1.7% to 2754.58 and Korea's Kospi skidded 2.2% 2109.73.

Japan's Nikkei Stock Average ended 1.4% lower at 9926.54, Australia's S&P/ASX 200 index lost 1.9% to 4495.4, Taiwan's Taiex declined 2% to 8491.01 and India's Sensex dropped 1.7% to 18,411.62.

Commodities: Oil down, gold up
Oil futures slipped as concerns over Europe's debt crisis boosted the dollar and triggered a flight from commodities and other risky assets.

Light, sweet crude for August delivery fell 42USc, or 0.4%, to $US94.73 a barrel in New York. Brent crude on ICE Futures Europe declined $US1.11, or 1%, to $US116.13 a barrel.

Gold rose alongside the US dollar for a second day as investors sought refuge from Europe's sovereign debt problems.

The most actively traded contract, for August delivery, was up $US2, or 0.1%, at $US1551.20 an ounce in New York.

Currencies: Euro recovers after hitting new low
The euro rose after plunging to a record low against the Swiss franc and to four-month lows against the dollar and the Japanese yen as the European debt crisis continued to roil markets.

The euro traded recently at $US1.3949 from $US1.4030 late on Monday in New York. The dollar was at ¥79.65 from ¥80.26, while the euro was trading at ¥111.06 from ¥112.56 and at 1.1606 Swiss francs compared with 1.1728 francs.

The UK pound was at $US1.5809 from $US1.5907.