* AIG has biggest loss in U.S. corporate history
* Dow industrials fall below 7,000; financials slump
* Energy shares fall along with oil prices
* Dow off 3.1 pct; S&P off 3.6 pct, Nasdaq off 3.1 pct
(Updates to midafternoon, changes byline)
By Leah Schnurr
NEW YORK, March 2 (Reuters) - U.S. stocks skidded to fresh
multiyear lows on Monday as the government bailed out American
International Group <AIG.N> again and reported a record $61.7
billion loss that raised fears efforts to stem the financial
crisis still are not enough.
The Dow Jones industrial average fell to its lowest since
April 1997 on an intraday basis, hit by selling in financial,
energy and industrial stocks, while all 10 S&P sectors were in
the red.
Among financials, Goldman Sachs <GS.N> fell 3.7 percent to
$87.72 while Morgan Stanley <MS.N> slid 7.8 percent to $18.02.
The S&P financial index <.GSPF> shed 5.3 percent.
"They're trying to make it workable for AIG but even at
that, what's noticeably missing is any type of comment as to
the end-game," said Paul Nolte, director of investments at
Hinsdale Associates, in Hinsdale Illinois.
"When does this end? What are the sign posts that we're all
going to be looking at to indicate to the government that this
is working or that we are seeing a turn around?"
Investors fretful about the dire state of the economy and
poor prospects for corporate profits also dumped shares of
large manufacturers, with 3M Co <MMM.N> off 4.6 percent at
$43.37 and Caterpillar Inc <CAT.N> down 8.3 percent to $22.56.
The Dow Jones industrial average <> tumbled 219.75
points, or 3.11 percent, to 6,843.18. The Standard & Poor's 500
Index <.SPX> gave up 26.61 points, or 3.62 percent, at 708.48.
The Nasdaq Composite Index <> lost 42.13 points, or 3.06
percent, to 1,335.71.
Since the start of 2009, the Dow has lost more than 22
percent, while the S&P 500 is off more than 21 percent after
attempting a rally off November lows. Since the market's
October 2007 record high, the Dow Jones Wilshire 5000 index
<.DWCF> -- one of the broadest measures of U.S. stocks -- is
down more than 50 percent, or about $10 trillion.
Under the government's latest revised rescue plan, AIG will
gain access to up to an additional $30 billion in new capital.
For details see []. Last fall, AIG received a
commitment for $150 billion in government aid. The company,
once the world's largest insurer, also reported a
fourth-quarter loss on Monday that was the biggest in U.S.
corporate history.
Shares of AIG rose 7.1 percent to 45 cents on the New York
Stock Exchange.
Underscoring the negative tone were comments from
billionaire investor Warren Buffett, who said "the economy will
be in shambles throughout 2009", further dampening investor
confidence. [].
Fresh data pointed to more damage in the economy after a
report from the Institute for Supply Management showed
manufacturing continued to contract in February, albeit at a
slower rate than expected. []
Chevron <CVX.N> was the Dow's biggest drag, giving up 4.1
percent at $58.23 as the price of oil dropped as the slowing
global economy threatened to further hurt fuel consumption.
U.S. oil futures <CLc1> slid nearly 10 percent to $40.39 a
barrel.
On Nasdaq, biotech stocks dropped for the fourth
consecutive session as worries persisted that President Barack
Obama's proposed budget will strangle the companies' profits.
The AMEX Biotechnology index <.BTK> slumped 4.2 percent.
(Editing by James Dalgleish)
