World stocks, oil fall as crisis fears increase

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German Stock Market. Photo: EFE

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 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.