US STOCKS-Wall Street tumbles in global sell-off

                                
 * Global markets fall on credit, economic worry
                                
 * European bank rescues add to nervousness
                                
 * Citigroup, Wells Fargo slip on Wachovia deal uncertainty
                                
 * Oil falls on weak demand worry
 (Updates to midmorning)
                                
 By Ellis Mnyandu
                                
 NEW YORK, Oct 6 (Reuters) - U.S. stocks fell on Monday,
with the Dow diving 400 points to below 10,000 for the first
time in four years, as investors feared the widening fallout
from the credit crisis would drag the economy into recession.
                                
 Wall Street's tumble was part of a global sell-off. But as
severe as the U.S. losses were, they were still significantly
less than the sharp declines across Europe and in emerging
markets, such as Brazil where trading was halted after a 15
percent drop in its benchmark index.
                                
 The financial sector was again a main catalyst for the
drop, but the turmoil quickly spread to energy and others.
                                
 Among financial services stocks, Bank of America <BAC.N>
fell more than 9 percent, putting the stock among the Dow's top
drags.
                                
 Persistent strains in the credit markets added to
nervousness about the wider economic outlook, while a spate of
bank rescues in Europe heightened concerns about the stability
of global financial institutions. The S&P sub-index of
financial companies <.GSPF> fell 4.2 percent.
                                
 "The markets are incorporating in their view a recession
that will take down profits," said Subodh Kumar, chief
investment strategist at Subodh Kumar & Associates in Toronto,
Canada.
                                
 The Dow Jones industrial average <.DJI> slid 510.38 points,
or 4.94 percent, to 9,815.00. The Standard & Poor's 500 Index
<.SPX> tumbled 63.52 points, or 5.78 percent, to 1,035.71. The
Nasdaq Composite Index <.IXIC> plunged 125.62 points, or 6.45
percent, to 1,821.77.
                                
 The Dow fell below 10,000 for the first time since October
2004.
                                
 A slide of more than 3 percent in oil prices to $90 a
barrel underscored concerns about the toll of the credit crisis
on the outlook for global economic growth.
                                
Shares of energy companies were a top drag, with Exxon Mobil
Corp <XOM.N> down nearly 2 percent, while shares of Chevron
Corp <CVX.N> tumbled more than 5 percent.
                                
 The market's tumble emphasized that the $700 billion U.S.
financial sector rescue plan passed by Congress on Friday was
not bringing immediate relief to financial markets' woes.
                                
 Traders speculated the sell-off might spur global central
banks to coordinate interest rate cuts to shore up investor
confidence, but not everyone thought this move would make an
important difference.
                                
 "I don't even think that a rate cut now will have much
effect other than some psychological  effect," Kumar said.
                                
 Shares of Exxon Mobil declined to $76 on the New York Stock
Exchange, while those of Chevron fell to $75.44 as U.S.
front-month crude <CLc1> tumbled $3.83 to $90.07 a barrel.
                                
 Shares of economic bellwethers, including General Electric
<GE.N> were also pummeled. GE, a diversified manufacturer,
shares dropped 7.2 percent to $20.01.
                                
 Bank of America dropped to $31.36 after the bank agreed to
settle claims brought by U.S. attorneys-general regarding risky
loans originated by mortgage lender Countrywide Financial in a
deal that could be worth more than $8.6 billion.
                                
 The Federal Reserve was pushing Citigroup Inc <C.N> and
Wells Fargo & Co <WFC.N> to compromise over their competing
bids for hobbled U.S. bank Wachovia Corp <WB.N> that could
result in them carving up its assets, people familiar with the
matter said.
                                
 Citigroup shares fell 7.2 percent to $17.03 amid
uncertainty about the Wachovia deal, while shares of Wells
Fargo slipped 1.9 percent to $33.90. Wachovia shares were off
8.1 percent at $5.71.
                                
 On Nasdaq, shares of iPod and iPhone maker Apple Inc
<AAPL.O> were a top drag, falling nearly 6 percent to $91.75.
Technology shares are seen particularly vulnerable as credit
constraints hamper business investment and consumer spending.
                                
 In a bid to stave off the widening credit turmoil, France's
BNP Paribas <BNPP.PA> agreed to buy assets of troubled banking
and insurance company Fortis <FOR.BR><FOR.AS> in Belgium and
Luxembourg for 14.5 billion euros ($19.71 billion). For
details, see [ID:nL6316554]
                                
 Over a frantic weekend, German officials clinched a revised
rescue deal for lender Hypo Real Estate <HRXG.DE> that will see
commercial banks and insurers provide 15 billion euros in
liquidity, on top of an initial pledge of 35 billion euros.
[ID:nL584161]
 (Editing by Kenneth Barry)