World sharemarkets slump, Dow down 635 pts

World sharemarkets slumped further on fears of the US is heading toward another recession and the euro-zone debt crisis shows no resolution.

On Wall Street, the six largest-ever selloff was the first trading session since Standard & Poor's downgraded the US government's credit rating late last week.

Investors rushed to gold, sending it through $US1700 an ounce for the first time, and US Treasury bonds. Other commodities such as oil and industrial metals fell.

The Dow Jones Industrial Average dropped beneath 11,000 for the first time since October 2010, closing 634.76 points lower, or 5.6%, at 10,809.85.

The deep plunge follows the worst weekly point declines for major indexes since December 1, 2008, at the height of the global financial crisis.

The S&P 500 stock index finished down 6.7% to 1119.46, with financial and energy stocks falling hardest. The Nasdaq Composite plunged 6.7% to 2357.69, its worst percentage lo0ss since December 1, 2008.

Other markets: Europe, Asia fall
European stock markets tumbled as investors were underwhelmed by the European Central Bank's move to buy Italian and Spanish bonds.

The Stoxx Europe 600 index dropped 4.1% to 228.98, bringing its losses this month to nearly 14%.

Germany's DAX index, heavily weighted toward automotive and industrial stocks, was the worst performer of the major indexes, tumbling 5% to 5923.27.

Car makers BMW and Daimler sank 8.8% and 7.1%, respectively, while steelmaker ThyssenKrupp plunged 9.6%.

France's CAC 40 index slid 4.7% to 3125.19 and the UK's FTSE 100 index fell 3.4% to 5068.95.

Other European markets fared even worse. Russia's RTS index dropped 7.8% as falling oil prices hit the energy sector. In Greece, the ASE Composite index tumbled 6% to 998.24.

In Asia, the Japanese benchmark Nikkei index closed down 2.2% at 9097.56 after dropping as low as 9057.29. The broader Topix fell 2.3% to 782.86.

The Nikkei is now down 8.1% from its 25-day moving average.

Elsewhere, Hong Kong's Hang Seng Index plunged more than 4% to hit its lowest level in a year, while the Shanghai Composite Index dropped more than 3%.

Commodities: Oil drops to $US83, gold passes $US1700
Crude futures fell sharply, declining nearly 4%. Crude for September delivery dropped $US3.31, or 3.8%, to settle at $US83.57 a barrel in New York.

The contract earlier hit an low of $82.52 a barrel, marking its sixth loss in seven sessions.

Brent crude shed as much as 3.6% to $US105.43 a barrel before also paring losses.

Gold vaulted above $US1700 an ounce for the first time as the metal attracted a rush of risk-averse investors.

Gold for December delivery advanced $US61.40, or 3.7%, to $US1713.20 an ounce in New York.

Currencies: Dollar, euro fall
The US dollar dropped against the Swiss franc and yen, while the euro fell.

The euro hit a record low against the Swiss franc, falling as low as 1.0640 Swiss francs. It also lost 1.8% versus the yen.

The dollar fell 1% to ¥77.57 and was down 2.1% at 0.7507 Swiss francs.