Wall St plunges as Germany dampens crisis hopes

Stocks on Wall Street and in Europe turned lower after Germany played down the chances of a resolution to the sovereign-debt problem at a euro-zone summit on October 23.

Markets had risen earlier after top European officials vowed to unveil a far-reaching sovereign-debt rescue plan by that date.

The comments by a German representative for Chancellor Angela Merkel overshadowed a large US corporate merger and a weekend of progress in dealing with the crisis.

The Dow Jones Industrial Average closed (9am NZ time) on its lows at 11,397.68, down 246.81 points, or 2.1%, wiping out all of the gains on Friday when the Dow ended at a 2½-month closing high and in positive territory for the year for the first time since August 31.

The S&P 500 index shed 1.9% to 1200.87 and the Nasdaq Composite declined 2.0% to 2614.92. All S&P 500 sectors lost ground, with financial and materials stocks leading the index's decliners.

Shares of El Paso surged 23% after the company agreed to be acquired by Kinder Morgan in a $US21.1 billion cash and stock deal that will create North America's largest natural-gas pipeline network. Kinder Morgan gained 6.3%.

Other markets: Europe down, Asia up
Asian stocks ended mostly higher. Japan's Nikkei Stock Average rose 1.5% to 8879.66, Australia's S&P/ASX 200 added 1.7% to 4337.90 and Korea's Kospi climbed 1.6% to 1865.18.

Hong Kong's Hang Seng Index gained 2% to 18,873.99, while the Shanghai Composite added a more modest 0.4% to 2440.40.
India’s Sensitive Index lost 0.3% to close at 17,025.09.

Commodities: Oil down, gold steady
Crude futures eased as fresh Europe worries halted an early rally. Light, sweet crude for November delivery settled down 42USc at $US86.38 a barrel in New York after earlier rising as high as $US88.18.

Brent crude for December delivery on the ICE futures exchange was down $US2.07, or 1.8%, at $US110.16 a barrel.

Gold futures fell as hopes eased on an early solution to Europe's credit crunch. The contract for October delivery settled down $US6.30, or 0.4%, at $US1675.00 an ounce in New York.

Currencies: Dollar rises
The US dollar rose versus the euro and most other major currencies after Germany Chancellor played down expectations that European leaders will finalise a comprehensive euro-zone debt solution this weekend.

The euro was at $US1.3776 compared with $US1.3882 late on Friday. The dollar was at ¥76.75, compared with ¥77.21, while the euro was at ¥105.73 compared with ¥107.18.

The UK pound was trading at $US1.5779 from $US1.5822, while the dollar bought 0.8976 Swiss franc from 0.8917 franc.