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NEW YORK: Wall Street shares tumbled on Monday but came back from the edge of the abyss in a highly volatile session as panic gripped world markets over the global financial crisis.
The Dow Jones Industrial Average fell as much as 800 points during the session, slipping below the key psychological level of 10,000 for the first time since 2004.
The blue-chip index closed down 369.88 points (3.58 percent) at 9,955.50.
The Nasdaq composite skidded 84.43 points (4.34 percent) to 1,862.96 and the Standard & Poor's 500 index lost 42.34 points (3.85 percent) to 1,056.89.
Investors dumped shares in a sign that investors were not reassured by congressional approval of a 700-billion-dollar bank bailout, seen by some as insufficient to unclog credit markets and ease economic turmoil.
"Credit markets seized up worldwide on suspicions that the government's 700-billion-dollar rescue plan won't be a quick fix," said Al Goldman at Wachovia Securities.
"Money market rates remained elevated, and President (George W.) Bush said the plan will 'take a while' to free up credit."
The action came as European equities were pounded by fresh troubles after a weekend meeting of the leaders of France, Britain, Germany and Italy failed to produce a joint European financial rescue package.
Stocks in London lost 7.86, Paris shares shed 9.04 percent, while Frankfurt dropped 7.07 percent. In Moscow, a 19-percent dive forced yet another halt to Russian trading in the worst day ever for the market.
"There's a massive lack of confidence," said Hargreaves Lansdown analyst Keith Bowman.
In the latest move to ease troubled credit markets, the Federal Reserve said it would start to pay interest on bank deposits for the first time and expand bank refinancing operations to 900 billion dollars by year-end.
Some analysts said the financial troubles are spreading, making it harder for authorities to act.
"At the root of the problem is the dislocation in money markets," said Chris Lafakis at Economy.com.
"This is being caused by a lack of trust by investors and creditors alike. Banks are hoarding capital and refusing to lend to each other for more than 24 hours. Not only do they fear their loans will not be repaid, they are also trying to ensure that they are able to meet year-end funding needs."
Banking shares remained under heavy pressure.
Wachovia shares slid 6.9 percent to 5.78 dollars, Citigroup fell 5.2 percent to 17.41 and Wells Fargo traded down 2.66 percent at 33.64 as the three banks declared a two-day cooling-off period following Citigroup's lawsuit over a Wells Fargo deal to buy Wachovia.
Elsewhere, eBay fell 8.13 percent to 17.89 dollars as the Internet auction giant announced job cuts and other reorganisational moves.
Pharmaceutical giant Eli Lilly fell 7.0 percent to 38.42 dollars after agreeing to a 6.5-billion-dollar purchase of biotech maker ImClone, up 2.96 percent at 66.86 dollars. Bristol-Myers Squibb, also in the hunt for ImClone, fell 5.43 percent to 19.32.
Bonds were sharply higher as investors looked for a safe haven. The yield on the 10-year Treasury bond tumbled to 3.426 percent from 3.644 percent on Friday and that on the 30-year bond slid to 3.942 percent against 4.123 percent. Bond yields and prices move in opposite directions. - AFP/de
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