* Spain's takeover of a savings bank adds to debt jitters
* Euro falls sharply; U.S. data adds to dollar strength
* Wall St plunges near closing on euro-zone bank woes
(Updates with U.S. markets close)
By Walter Brandimarte
NEW YORK, May 24 (Reuters) - The euro dropped over 1.5
percent and U.S. stocks slid on Monday after Spain's bailout of
a small bank raised concern about Europe's financial system,
boosting safe-haven demand for gold and U.S. Treasuries.
Stocks had a volatile session, with the Dow and the S&P 500
sinking more than 1 percent in the final trading minutes. In
Europe, however, stocks snapped a three-day losing streak as
rising mining shares offset declines in bank stocks.
News that Spain's central bank on Saturday had taken over
savings bank CajaSur after a failed merger weighed heavily on
sentiment across financial markets. []
CajaSur will now have access to Spain's bank bailout fund.
Analysts worry other banks could require public funds at a time
when much of Europe is struggling with massive deficits.
"The Spanish news is not really a big story, but it does
highlight that there are a lot of cracks in the financial
system," said Steven Butler, director of foreign exchange
trading at Scotia Capital in Toronto.
"The concern is that if these cracks get bigger, the
question is who would be able to contain it. This is obviously
a warning and we'll see if it becomes more significant," he
added.
Wall Street seesawed during most of the day, with the
Nasdaq rising as much as 0.7 percent during the session. But
fears about Europe's ongoing debt crisis knocked down investors
later on the day.
The Dow Jones industrial average <> ended down 126.82
points, or 1.24 percent, at 10,066.57 while the Standard &
Poor's 500 Index <.SPX> lost 14.04 points, or 1.29 percent, to
1,073.65. The Nasdaq Composite Index <> slid 15.49 points,
or 0.69 percent, to 2,213.55.
Bank shares pressured the market, with the Standard &
Poor's financial index <.GSPF> falling 2.9 percent. Shares of
Citigroup <C.N> gained 0.8 percent, however, after Goldman
upgraded the bank.
European trading was thin due to a religious holiday, but
most markets were open. The FTSEurofirst 300 <> finished
0.33 percent higher, after sliding as much as 0.7 percent
earlier.
Shares of miners supported European markets higher as the
outlook for metals improved after an Chinese official said the
government should be particularly cautious in introducing new
monetary tightening measures.
Plans outlined by British Finance Minister George Osborne
and David Laws, Osborne's deputy, on Monday to cut 6.25 billion
pounds ($9 billion) of government spending generally hurt
sentiment, traders said.
Global stocks as measured by MSCI <.MIWD00000PUS> slid 0.7
percent, adding to last week's 4.8 percent loss.
But emerging markets stocks <.MSCIEF> rose 0.5 percent, as
rising prices of oil and other raw materials supported the
outlook for commodity-exporting countries.
U.S. crude oil futures edged up in choppy trading as some
analysts said the market was oversold, but concerns about
Europe curbed a sharp recovery in prices. The oil contract for
July <CLN0> ended up 0.24 percent, at $70.21 a barrel.
EURO PLUNGES AGAIN
The euro fell broadly on Monday, as persistent concerns
about the euro-zone debt situation threatened the future of the
single currency.
The news wiped out last week's short-covering rally in the
euro, which had been spurred by talk European monetary
officials might intervene to prop up the beleaguered single
currency.
The euro <EUR=> was down 1.67 percent at $1.236. Last week,
it reached a four-year low of $1.2143.
Data showing U.S. existing home sales rose more than
expected in April briefly pushed the euro to session lows
against the dollar at $1.2345, according to EBS data.
[]
"People are piling money into dollars and Treasuries,
hoping they can ride out the storm," said John Canally,
economist and investment strategist at LPL Financial in
Boston.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> rose 9/32
in price, with the yield at 3.2014 percent. Spot gold prices
<XAU=>, another safe-haven, climbed 1.4 percent to $1,191.50.
(Editing by Kenneth Barry)
