* Global markets sink on credit, recession fear
* European bank rescues fuel worries about spiraling crisis
* Oil falls on worry recession will crimp demand
* Dow down 3.6 pct, S&P down 3.9 pct, Nasdaq down 4.3 pct
(Updates to close)
By Kristina Cooke
NEW YORK, Oct 6 (Reuters) - U.S. stocks slid for a fourth
straight day on Monday, leaving the Dow below 10,000 for the
first time in four years, on fears the global economy was
hurtling into recession despite government efforts to contain
the fast-spreading financial crisis.
The steep declines came in the first full session since
the U.S. Congress approved a $700 billion bailout of the
financial industry, as lending came to a virtual halt and
investors shifted their focus to the crumbling outlook for the
economy and profits.
But the market cut almost half its losses in the final
hour of the session, as traders speculated the sell-off may
trigger a coordinated global response to thaw credit markets.
The S&P financial sector sub-index<.GSPF>, which had earlier
been down more than 8 percent, closed down 4.2 percent.
The energy sector skidded as the price of oil dropped to
an 8-month low below $88 a barrel on expectations that a
recession will further hamper global fuel demand.
Wall Street's drop was part of a breakneck global
sell-off, which led to temporary trading halts in Russia,
Brazil and Peru. The emergency rescue of two big European
banks and a move by several European governments to guarantee
bank deposits intensified fears that the credit crisis can not
be contained.
"We're clearly in the panic zone now. We've tipped over
from bear market to panic," said John Schloegel, vice
president of investment strategies for Capital Cities Asset
Management in Austin, Texas.
"We're past the bailout now and focused back on
fundamentals again and the fundamentals don't look good.
People are starting to come to grips with third-, fourth-
quarter earnings. If the supertanker of the U.S. economy is at
a complete standstill, which it might be, that has not been
adequately discounted yet," he said.
The Dow Jones industrial average <> fell 369.88
points, or 3.58 percent, to 9,955.50. It was the first time
the Dow closed below 10,000 since October 2004.
The Standard & Poor's 500 Index <.SPX> skidded 42.34
points, or 3.85 percent, to 1,056.89, while the Nasdaq
Composite Index <> dropped 84.43 points, or 4.34 percent,
to 1,862.96.
For the year to date, the Dow is down about 25 percent,
the S&P 500 is down 28 percent and the Nasdaq is down 29.8
percent.
In the latest development in the fast-changing U.S.
financial landscape, Citigroup <C.N> said it is suing Wachovia
<WB.N> and Wells Fargo <WFC.N> and is seeking more than $60
billion in damages over Wells Fargo's competing bid for
Wachovia.
Wells Fargo slipped 2.7 percent to $33.64, Wachovia shares
dropped 6.9 percent to $5.78 and Citigroup lost 5.1 percent to
$17.41.
Among other financial shares, Bank of America <BAC.N> fell
6.6 percent to $32.22 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.
Among shares of energy companies, Chevron Corp <CVX.N>
lost 3.2 percent to $76.84. An index of oil services companies
<.OSX> fell 7.8 percent. U.S. front-month crude <CLc1>
tumbled $6.07, or 6.5 percent, to settle at $87.81 a barrel.
Technology companies, which often have significant
overseas exposure, slid sharply. Shares of Oracle Corp
<ORCL.O>, the world's third-largest software maker, slid 6.1
percent to $18.30 on Nasdaq.
Shares of eBay Inc <EBAY.O> fell 5.5 percent to $17.89 on
Nasdaq after the online auctioneer said it plans to cut 10
percent of its work force and spend about $1.3 billion on
acquisitions to bolster its online payment and classified
units as it tries to counter a weak U.S. economy.
Trading was active on the New York Stock Exchange, with
about 1.95 billion shares changing hands, roughly in line with
last year's estimated daily average of roughly 1.90 billion,
while on Nasdaq, about 3.45 billion shares traded, sharply
above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones by 15 to 1 on
the NYSE and on the Nasdaq, by about 6 to 1.
(Reporting by Kristina Cooke; Editing by Jan Paschal)
