Shares slump on record surge in Italian bonds

Dow Jones: 11,780.94 (-389.24) Nasdaq: 2,621.65 (-21.23) S&P 500: 1,229.10 (-46.82)US STOCKS sank as a surge in Italian bond yields intensified the credit crisis and concern grew that European leaders may be unable to keep the euro zone intact.

The euro slid to a one-month low and Treasuries rallied. The Standard and Poor’s 500 Index lost 3.7 per cent, its worst drop in almost three months.

The Stoxx Europe 600 Index slid 1.7 per cent and yields on Italian government debt climbed to records.

The SP GSCI Index of commodities lost 1.3 per cent as oil retreated from the highest price in three months.

Citigroup, Bank of New York Mellon and JPMorgan Chase tumbled more than 7 per cent to lead declines in all 24 stocks in the KBW Bank Index, which sank 5.9 per cent for its worst loss since August 10th. While the index of lenders is down more than 25 per cent in 2011, it has trimmed its slump from 36 per cent as of October 3rd.

JPMorgan and Bank of America led losses in all 30 stocks in the Dow Jones Industrial Average, which sank 3.2 per cent. Best Buy rose 1.4 per cent for the only gain in the SP 500 after Cleveland Research said the electronics retailer may post its first monthly comparative sales gain in six quarters.

General Motors tumbled 11 per cent, its worst drop since its post-bankruptcy initial public offering a year ago, after rescinding its target for break-even results in Europe, a region where it hasn’t turned an annual profit in more than a decade.

Adobe Systems slid 7.7 per cent after the largest maker of graphic-design software cut its earnings forecast. The VIX, as the Chicago Board Options Exchange Volatility Index is known, surged 32 per cent to 36.16 for its biggest increase in almost three months.

All 24 commodities tracked by the SP GSCI Index fell except for coffee, led by declines of at least 3.2 per cent in cocoa, zinc and Kansas wheat.

Oil slipped 1.1 per cent to $95.74 a barrel, resuming losses after gaining earlier as US government data showed an unexpected decline in crude inventories and tumbling fuel stockpiles.

Gold futures declined from a seven-week high as the dollar’s surge curbed demand for the precious metal as an alternative investment. – (Bloomberg)