* Global stocks plunge on fears credit crisis will widen
* Yen soars worldwide, dollar at 2-1/2-year trough vs yen
* Bonds gain on safety bid as global equities plunge
* Oil falls below $90 a barrel on slowing demand outlook
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Oct 6 (Reuters) - Fears of deepening bank
problems in Europe and wider economic woes around the world
slammed global equity markets and pushed oil prices lower on
Monday, sending investors fleeing to safe-haven investments.
U.S. and euro zone government debt gained, gold futures
jumped more than 5 percent and the yen soared across the board
amid heavy selling of riskier positions.
Crude prices fell below $90 a barrel to their lowest in
eight months at one point, before paring some losses, pressured
by expectations energy demand will fall sharply due to slowing
economic growth worldwide.
U.S. stocks slid at the open as the widening fallout from
the credit crisis fueled jitters about the economy and
corporate profits. European shares fell more than 5 percent.
"This is a stampede," said Valerie Plagnol, chief
strategist at CM-CIC Securities in Paris.
Investors were unnerved by massive government intervention
in capital markets in such a timespan, Plagnol said.
Although the cost of borrowing overnight funds on
international money markets remained close to central banks'
targets, thanks to continued liquidity injections, lending was
almost nonexistent across all other maturities.
"The issue right now is to unclog the money market. As long
as the money market is not functioning properly we are stuck in
this situation," Plagnol said.
The Dow Jones industrial average <> plunged 405.88
points, or 3.93 percent, at 9,919.50, falling below 10,000 for
the first time since October 2004. The Standard & Poor's 500
Index <.SPX> was down 53.97 points, or 4.91 percent, at
1,045.26. The Nasdaq Composite Index <> was down 104.93
points, or 5.39 percent, at 1,842.46.
Before 10.30 a.m. in New York (1430 GMT), the FTSEurofirst
300 <> index of top European shares was down 6.9 percent
at 1,014.26.
Three more European governments offered bank deposit
guarantees as regulators from Washington to Seoul scrambled to
contain the deepest global financial crisis in 80 years.
"The prevailing macro sentiment is now crystallizing around
the notion that we are heading into a synchronized global
slowdown, a mirror image of the across-the-board expansion we
saw from 2004 to early 2007," said Edward Meir of broker MF
Global.
U.S. light sweet crude oil <CLc1> fell 4.25 percent to
$89.89 a barrel, after touching a session low of $88.89, its
lowest since early February.
U.S. gold futures rose more than 5 percent as jittery
investors flocked to bullion as a safe haven.
The gold contract for December delivery <GCZ8> was up
$39.60 at $873 in New York. Spot gold prices <XAU=> rose $38.30
to $873.10.
The U.S. dollar jumped to a 13-month high against the euro
and the yen rallied broadly. Sentiment soured sharply against
the euro after leaders of Europe's four biggest economies
decided against a coordinated plan at a weekend summit.
"The market is shunning the euro. The banking crisis (in
Europe) seems to have taken the spotlight over the U.S. and the
failure for European officials to come to an agreement on a
coordinated type bailout weighed on the euro," said Ronald
Simpson, director of global currency analysis at Action
Economics in Tampa, Florida.
Against the yen, the dollar <JPY=> fell 2.92 percent at
102.22.
The euro <EUR=> fell 1.39 percent at $1.3577, while the
dollar was up against a basket of major currencies, with the
U.S. Dollar Index <.DXY> up 0.6 percent at 81.400.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
1-4/32 in price to yield 3.46 percent. The 2-year U.S. Treasury
note <US2YT=RR> added 10/32 to yield 1.42 percent.
Asian stocks dropped overnight by about 5 percent and the
yen surged to a 2-year high against the euro as investors
doubted the U.S. and European response to the financial crisis
could prevent a deeper slump in the global economy.
Japan's Nikkei share average <> slumped 4.25 percent
to close at its lowest since February 2004. MSCI's index of
Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> slid 6.6
percent to the lowest since December 2005.
(Reporting by Chris Reese, Wanfeng Zhou and Frank Tang in New
York and Jane Merriman, Joe Brock and George Matlock in London;
Writing by Herbert Lash; Editing by James Dalgleish)
