NEW YORK: Shares on Wall Street hit a one-month low on Monday, extending losses from across Europe as fears over out-of-control government debt on both sides of the Atlantic hit financial markets. The S&P 500 index fell 2 percent, dropping below 1,200 points for the first time since October.
The Dow and tech-heavy Nasdaq indices also lost about 2 percent each, following through on last week's declines as a congressional "super committee" was expected to concede defeat in its bid to lower the US deficit.
US oil prices fell 2 percent as well, sliding to around $95 a barrel from Friday's close of above $97, and gold futures fell about 1 percent as risk aversion crossed over into commodities.
Investors took refuge in safe-havens, pushing up yields on benchmark 10-year US bonds down to 1.95 percent from 2.01 percent on Friday.
The dollar hit a six-week high versus a currency basket but then pared some of its gains after US existing home sales unexpectedly rose in October as low interest rates for mortgages and rising rents led more homebuyers into the market.
Light trading volume, expected throughout the week due to Thursday's US Thanksgiving holiday, could add to market volatility, traders said.
"It isn't just the failure of the (deficit) committee that's causing investors to shun risk around the world, although I thought we would get some kind of last-minute deal," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"Between the continued concerns about Europe, especially France now, and the comments out of China, there are just so many ongoing problems."
Around 11 a.m. EST, the Dow Jones industrial average was down 308.45 points, or 2.61 percent, at 11,487.71. The Standard & Poor's 500 Index fell 30.56 points, or 2.51 percent, at 1,185.09. The Nasdaq Composite Index was down 68.52 points, or 2.66 percent, at 2,503.98.
In Europe, stocks hit 6-week lows as Moody's warned about France's rating outlook and Spanish yields rose following election of a new government.
World stocks as measured by MSCI were down 2.5 percent for a 12 percent year-to-date loss. More volatile emerging market stocks lost 2.8 percent.
In Europe the heart of the debt storm the FTSEurofirst 300 index tumbled 3.1 percent, bringing it down more than 17 percent lower for the year.
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