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Image: AP Photo/Mark Lennihan

US stocks slump amid fears about European banks

The Dow Jones has fallen back again following yesterday’s gain.
Aug 10th 2011, 9:58 PM 106 0

STOCKS HAVE FALLEN at the close of trading  in the US as investors’ attention returns to the weak economy and Europe’s debt problems.

The Dow Jones industrial average is down 519, or 4.6 percent, to 10,720. It’s the third time in the last five trading days that the Dow lost more than 500 points. The S&P 500 is down 51 points, or 4.4 percent, to 1,121. The Nasdaq is down 101, or 4.1 percent, to 2,381.

European bank stocks fell on worries that the region’s debt problems are getting worse. That pulled down U.S. bank stocks. Financial stocks in the S&P 500 lost more than 7 percent.

The drop erases yesterday’s big gain following a Federal Reserve pledge to keep rates low. The Fed said it expects the recovery to remain slow.

Earlier France was forced to deny rumours that it could be the next country facing a credit-rating downgrade, reports the News York Times. Shares in Société Générale fell by as much as 21 per cent at one stage today.

The FTSE 100 was down 3.1 per cent on closing, its lowest since July 2010, according to Reuters. Yesterday it had risen 1.9 per cent. The ISEQ Index closed down 56, while Frankfurt’s DAX was also down upon closing – down 5.13 per cent. Paris’ CAC closed down 5.45 per cent.

Earlier:

Dour US opening sends European markets back into the red>

Early morning gains pared in European markets>

- Additional reporting by AP

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Emer McLysaght

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