FROM MORRISON SECURITIES PTY. LTD:

U.S. STOCK MARKETS

U.S. stocks slumped Wednesday as worries about the health of Spanish banks stoked concerns about the euro zone's debt crisis. The Dow Jones Industrial Average dropped 160.83 points, or 1.28%, to 12419.86, for its worst one-day percentage fall since April 10.

With one day of trading remaining in May, the Dow has lost 6% so far this month. A decline Thursday would make this the worst monthly performance for the blue-chip index since May 2010, when the European crisis first flared up.

The Standard & Poor's 500-stock index lost 19.10 points, or 1.43%, to 1313.32, while the Nasdaq Composite shed 33.63 points, or 1.17%, to 2837.36. Leading the stock declines were U.S. companies with significant exposure to global growth.

Energy stocks fell the most as crude oil tumbled 3.2%, while Alcoa and Caterpillar were also big drags on the Dow. Defensive stocks in telecommunications and health care fared relatively better on a day that saw all 10 sectors of the S&P 500 and all but one of the Dow components trade lower.

Disappointment also came from the day's U.S. economic data, which showed pending home sales for April declining, compared with expectations for a flat reading.

In company news, Research In Motion slid 7.8% after the company said Tuesday that it expected to report an operating loss for the current quarter, compared with analyst expectations of a profit, as competition for its BlackBerry devices has led to lower volumes and a more competitive pricing environment.

Apple rose 1.2% after Chief Executive Tim Cook said the tech company has "intense interest" in television and said the company wants to move as much manufacturing to the U.S. as possible.

Facebook fell 2.3% one day after the stock tumbled 9.6% as options trading began on Tuesday. Pep Boys-Manny Moe & Jack plunged 20% after the auto-parts retailer said it terminated the agreement to be taken private by Gores Group, and that it will receive a $50 million termination fee.

EUROPEAN STOCK MARKETS

The fall in risky assets came as Spain's banks saw an erosion in deposits. Retail and corporate deposits in Spanish banks fell EUR31.44 billion ($39.31 billion) to EUR1.624 trillion, their lowest since the euro-zone debt crisis began, according to data published by the European Central Bank.

Separately, the European Union's executive arm said in a report that the 17 countries that use the euro should consider setting up a "banking union" that allows them to share the burden of bank failures. Meanwhile, euro-zone economic sentiment fell more than expected in April.

Continued concerns about Spanish banks sent the country's stock market to fresh nine-year lows, Germany's two-year note yield to zero and the euro to its weakest level against the dollar in nearly two years.

Investors scrambled for safe havens, dumping stocks as well as debt from Italy and Spain, two financially stressed nations that also are among the biggest in the 17-nation euro zone.

They brushed off the European Commission's statement that the euro area's permanent rescue fund might be given permission to directly recapitalize the currency union's ailing banks, saying it would first need the direct agreement of Germany, the euro zone's de facto pay master, and the European Central Bank.

Pressure remained on Spain as Egan Jones Ratings Co. downgraded Spain's debt to B from BB-minus with a negative outlook after Tuesday's market close.

Amid fast-moving events, Spain's IBEX 35 dropped for a third day, sliding 2.6% to 6090.40, its lowest close since April 1, 2003. Shares of Bankia tumbled another 8.6% for the sixth consecutive loss.

The moves came as the ECB said it would oppose an attempt by Spain to use the central bank's lending facilities to fund the bailout of the troubled lender. Finance Minister Luis de Guindos clarified the government's rescue plan for Bankia, saying it will raise the EUR19 billion needed for the bailout through sales of government bonds.

Overall, the benchmark Stoxx Europe 600 index fell 1.5% to 240.56, its fourth lowest close of the year. In another sign of shrinking confidence in Spain's banking sector, retail and corporate deposits at its banks fell in April to the lowest level since the start of the euro crisis, the ECB said.

Spanish 10-year yields soared 0.23 percentage point to 6.64% as European markets closed, while Italy's 10-year yield broke above 6%, rising 0.18 percentage point to 6.06%, according to Tradeweb.

An auction of Italian bonds attracted tepid demand. Borrowing costs at these levels are widely considered to be unsustainable in the long run.

Meanwhile, the yield on the 10-year German bond hit an all-time low of 1.261% as nervous investors clamored for the safety of German debt. It ended the European session at 1.27%, down 0.10 percentage point.

Yields on the country's two-year notes at one point hit zero for the first time, and ended the day at 0.007%, down 0.04 percentage point.

Further adding to the pressure on stocks, the European Commission said its economic sentiment indicator for the currency area fell to 90.6 in May from 92.9 in April, the lowest level in 31 months.

Among major national benchmarks, the U.K.'s FTSE 100 index dropped 1.7% to 5297.28. With one trading day left in May, it has plummeted 7.7% and could end with its biggest monthly fall since February 2009.

France's CAC-40 skidded 2.2% Wednesday to 3015.58 and Germany's DAX fell 1.8% to 6280.80. Miners fell on a report from the Xinhua News Agency suggesting the Chinese government won't launch anything on the scale of its 2008 stimulus, despite reports to the contrary Tuesday.

Kazakhmys slid 4.3% and Rio Tinto dropped 4.1%. Falling energy prices pushed down BG Group, which skidded 4.6%, and BP, which lost 2.1%. Italy's FTSE MIB index dropped 1.8% to 12.872.58, while the Athens General Index dropped 3.2% to 511.29. National Bank of Greece SA tumbled 7.9%.

ASIA-PACIFIC STOCK MARKETS

Asian stocks fell Wednesday as hopes for a large Chinese stimulus package were dashed and concerns about Spanish banks resurfaced.

The short rally that buoyed stocks in recent sessions ran out of steam, as most markets ended mildly down in a day characterized by relatively light trading volumes.

Hong Kong stood out, however, with the Hang Seng Index finishing 1.9% lower at 18690.22 points, wiping out the gains made in the previous two sessions.

Both Japan's Nikkei and Korea's Kospi fell 0.3% to 8633.19 and 1844.86, respectively, while the China Shanghai Composite lost 0.2% to 2384.67.

Hopes for a Chinese stimulus package, which were partly responsible for the recent rally in Asian stocks Tuesday, were moderated by a Xinhua News Agency analysis saying the government wouldn't launch anything on the scale of its 2008 stimulus plan.

Investor concerns also rose over Spain after its credit rating was downgraded by Egan-Jones Ratings. A fall in the euro to a four-month low against the yen hurt Japanese exporters with an exposure to Europe.

Chinese infrastructure companies fell on the Xinhua report, especially companies involved in the construction of railways such as China Railway Construction, which dropped 3.3% in Hong Kong.

Chinese resource companies, which led Tuesday's rally on the hopes of a stimulus, also dropped in Hong Kong. Coal companies China Shenhua and China Coal Energy were both down 1.6%, while aluminum producer Chalco dropped 0.3%.

Companies that manufacture construction equipment underperformed the Nikkei, after rallying earlier in the week on hopes that a Chinese stimulus package could boost demand. Both Komatsu and Hitachi Construction Machinery fell 1.2% and 1.7%, respectively.

Agricultural Bank of China fell 4%, following a report by Chinese magazine Caixin saying that Vice President Yang Kun has been detained in connection with a corruption investigation.

COMMODITIES

Base metals closed mostly firmly lower on the London Metal Exchange Wednesday, with many in the complex sliding to multiple-month lows as euro-zone fears tipped broad financial markets into the red.

At the close, LME three-month copper was 2.5% lower at $7,475 a metric ton, having earlier fallen to a near-five-month low at $7,463/ton.

Copper's break below $7,500/ton Wednesday was significant, since this area has been a key support level for the red metal in recent months.

Elsewhere in the complex, nickel which closed 1.2% lower at $16,300/ton fell to a two-and-a-half-year low at $16,170/ton during Wednesday's session.

Oil futures fell more than 3% to finish at their lowest level in seven months as Spain's intensifying banking crisis prompted fresh worries about the future of the euro zone.

Light, sweet crude for July delivery settled $2.94, or 3.2%, lower at $87.82 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 21.

Brent crude on the ICE futures exchange settled $3.21, or 3%, lower at $103.47 a barrel, its lowest settlement since Dec. 16. Gold futures ended higher Wednesday after prices touched a fresh 2012 low during the session and drew investors to the market.

Gold locked in gains on a day when most other commodities suffered decisive losses on renewed fears about the euro-zone credit crisis. The precious metal caught a boost as prices per troy ounce neared the closely watched $1,535 area seen as a key support level.

The most-actively traded contract, for August delivery, gained $14.70, or 1%, to settle at $1,565.70 a troy ounce. Gold prices had set a fresh 2012 intraday low of $1,532.10 a troy ounce.