Europe debt fears, US woes rattle global markets

NEW YORK: Stock markets in the United States and across much of Europe and Asia tumbled on Tuesday, amid fears of the eurozone's debt crisis and a possible US slowdown, but later enjoyed a modest rebound.

On Wall Street, the Dow Jones Industrial Average sank 100.96 points (0.90 percent) to close at 11,139.30, its third straight trading day with triple-digit losses.

The broader S&P 500 fell 8.73 points (0.74 percent) to 1,165.24, while the Nasdaq Composite, buoyed by surprising strength in the tech sector, slipped only 6.50 points (0.26 percent) to 2,473.83.

US stocks had plunged more than two percent in the first minutes of trade, after markets reopened from a long holiday weekend.

Investors were unsettled by anti-austerity protests in Italy and Spain and concerned by signs that Greece might fail to meet debt-cutting goals and that Germany may drop support for the latest Greece bailout plan.

"Eurozone anxiety continues to reign," analysts at Charles Schwab said in a research note.

Adding to the concerns, Switzerland's central bank said it would fight to keep the Swiss franc from rising past 1.20 francs against the euro, sending safe-haven flows surging to the dollar.

European stocks were mixed. London climbed 1.06 percent in a modest rebound from Monday's brutal sell-off, but Paris dropped 1.13 percent while Frankfurt fell 1.0 percent.

In Asia, Tokyo plummeted 2.21 percent to hit its lowest level since April 2009, while Seoul shed 1.07 percent and Sydney tumbled 1.60 percent.

The global jitters sent investors briefly flocking to gold and US government debt, both traditional safe-haven assets.

Gold hit a record high price above $1,921 an ounce on the London Bullion Market, but then slumped to finish the day at $1,895.

The yield on the 10-year US Treasury note fell to a historic low of 1.929 percent before bouncing back. Bond yields and prices move in opposite directions.

The turnaround was boosted by positive data on the US service sector, which grew more than expected in August, according to a monthly survey by the Institute for Supply Management.

The ISM index of non-manufacturing activity rose to 53.3 percent last month, up from 52.7 percent in July. Any level above 50 indicates growth.

"Stocks received temporary relief from the August ISM Service Index," analysts at Briefing.com said in a research note.

Investors hunting for bargains also helped the stock market pare its early losses, with gains by technology companies like Amazon (up 2.9 percent), Netflix (up 2.7 percent) and Apple (up 1.5 percent).

"The tech sector has been leading the market on its rally from the morning's lows. It lent a bottom-fishing mentality," said Michael James, managing director at Wedbush Morgan Securities.

Bank stocks ended the day with sharp losses, however, with Bank of America down 3.6 percent, Citigroup off 2.5 percent and JPMorgan Chase down 3.4 percent.

Copyright APP (Associated Press of Pakistan), 2011

Copyright AFP (Agence France-Presse), 2011