World markets tumble as Euro debt crisis intensifies

Stocks on Wall Street followed a rout in Europe with the benchmark Dow Jones Industrial Index plunging more than 500 points, or 4.3%, and erasing all its gain this year.

The worldwide selloff was sparked by investors losing faith in the ability of the world's policy makers to revive the global economy and stave off a rolling debt crisis in Europe.

In Europe, where markets plunged 3.4% – the most in 15 months – the growing debt crisis was exacerbated by the failure of the European Central Bankto provide help for the beleaguered Spanish and Italian economies.

In the US, recent economic data have pointed to a slowing of the recovery and investors are now bracing for the closely watched non-farm payroll report on Friday.

The Dow tumbled 512.76 points to 11,383.68 at the close (8am NZ time) in a one-way session. The slump of the past few weeks has driven the Dow down 10% from its May intraday highs – a decline that is classified as a correction.

The S&P 500-stock index was down 4.8%, to 1200.07 and has also fallen more than 10% since May. The Nasdaq Composite slumped 5.1% to 2556.39.

All but one Dow stock was lower and all the S&P 500 sectors were in the red.

Against the trend, Kraft Foods rose 2.7% after saying it would split into two publicly traded companies, putting its global snacks and North American grocery businesses in separate baskets.

Other markets: Europe, Asia drop
The ECB resumed purchases of government bonds for the first time in five months but investors were unnerved that it was only buying Portuguese and Irish government bonds.

The Stoxx Europe 600 index fell 3.4% to 243.33, its biggest one-day percentage drop since May 7, 2010, amid the crisis over Greece's finances.

London's benchmark FTSE 100 index fell 3.4% to 5393.14, while France's CAC-40 index shed 3.9% to 3320.35.45 and Germany's DAX dropped 3.4% to 6414.76.

Spain’s IBEX 35 fell 2.9%, while Italy’s FTSE MIB declined 3.2%.

Korean and Australian stocks were among Asian markets ending sharply lower.

The Nikkei Stock Average overcame a lacklustre start to rise more than 1% during the session, as the yen slumped against major currencies after an intervention by the Ministry of Finance.

But the benchmark finished the day just 0.2% higher at 9659.18 amid scepticism the measures can keep the yen down for long

Australia's S&P/ASX shed 1.3% to 4276.5, Taiwan's Taiex shed 1.7% to 8317.27, Hong Kong's Hang Seng Index dropped 0.5% to end at 21,884.74 and India's Sensex fell 1.4% to 17,693.18.

China's Shanghai Composite index ended 0.2% higher at 2684.04.

Commodities: Oil drops below $US90, gold tumbles
Oil futures plunged to their lowest level since late February in a broad market selloff.

Light, sweet crude for September delivery fell as low as $US87.25 a barrel, the front-month contract's weakest level since February 22, when the conflict in Libya began to intensify.

The contract was down $US3.31, or 3.6%, at $US88.62. September Brent crude on the ICE Futures Europe exchange was down $US3.93, or 3.5%, to $US109.30 a barrel.

Gold tumbled from record highs in the broad selloff. Gold futures climbed early in the day to $US1681.80 an ounce before dropping back to as low as $US1640, a roundtrip of more than $US40.

The gold futures contract for August delivery fell $US7.20, or 0.4%, to settle at $US1656.20 in New York.

Currencies: Euro plunges
The euro traded down by a hefty 1.4% against the US dollar and tanked nearly 1.3% against the Swiss franc, approaching its all-time low of 1.0795 francs.

The euro was at $US1.4160 from $US1.4323 late on Wednesday. The dollar was at ¥78.89, from ¥77.06, while the euro was at ¥111.67 from ¥110.37.

Meanwhile, the UK pound was at $US1.6297 from $US1.6426. The dollar bought 0.7659 franc from 0.7703 franc.