US Markets

U.S. stocks plunged in the biggest selloff since the financial crisis, driving the Dow Jones Industrial Average down more than 500 points, as investors appeared to lose faith in the ability of the world's policy makers to revive the global economy and stave off a rolling debt crisis in Europe. The Dow kept cascading lower throughout the session. It finished just off the lows with a 512.76-point decline, or 4.31%, to 11383.68, erasing all its gains for 2011.

The slump of the past few weeks has driven the Dow down more than 10% from its May intraday highs--putting the index officially in correction territory. It was the measure's biggest single-day loss since Dec. 1, 2008, when the Dow plunged 679.95 points at the height of the financial crisis, one of the market's worst days ever. The Standard & Poor's 500-stock index fell 60.27 points, or 4.78%, to 1200.07. The S&P and Nasdaq Composite also moved into correction territory.

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The Nasdaq slumped 136.68 points, or 5.08%, to 2556.39. Investors across the globe have been buffeted by economic and political turmoil in recent days. In the U.S., fears have turned from worries about a possible default by the U.S. government to a weakening economic outlook. A string of data have pointed to a slowing of the recovery, and investors are now bracing for the closely watched non-farm payroll report Friday.

In Europe, leaders are struggling to contain a growing debt crisis. Investors are increasingly worried that troubles are spreading to Italy and Spain, driving down stocks across the region and sending borrowing costs of peripheral nations soaring. All the blue-chip Dow stocks were lower as investors sold across the board. All the S&P 500 sectors were in the red and just three of the 500 stocks rose. Aluminum producer Alcoa was the hardest hit blue-chip stock, plunging 9.3%, followed by Bank of America, which fell 7.4%.

European Market

European stock markets plunged 3.4%, the largest one-day drop in more than a year, amid growing fears about global growth and that the euro zone's debt saga could intensify. European Central Bank President Jean-Claude Trichet acknowledged the risks to growth in the region, saying economic risks may have intensified, and that recent data showed the growth pace in Europe has decelerated.

Trichet also said the bank would hold more liquidity operations to give euro-area banks more cash. But while the ECB resumed purchases of government bonds for the first time in five months, investors were unnerved that it was only buying Portuguese and Irish government bonds, a decision that Trichet acknowledged wasn't unanimous.

Yields on Spanish and Italian bonds have been climbing in recent weeks, fueling worries that they could run into funding problems, and market participants had been hoping that the ECB would step in and buy their bonds in the open market.

Thursday's decision suggests the bar for intervening in those markets remains high, and those bond yields began rising soon after Trichet's press conference ended. That helped fuel the drop in the Stoxx Europe 600 index, which fell 8.65 points, or 3.4% to 243.33, its biggest one-day percentage drop since May 7, 2010, amid the crisis over Greece's finances. Underscoring the worries that the euro-zone crisis could spread, U.K. regulators are pushing banks there to publicly reveal more information about their exposures to troubled European countries such as Belgium.

Among national benchmarks, France's CAC-40 index dropped 3.9% to 3320.35, its ninth consecutive loss, while the U.K.'s FTSE 100 index slid 3.4% to 5405.76 and Germany's DAX declined 3.4% to 6414.76. Banks, mining companies and energy stocks were among the biggest decliners in Europe. In London, Lloyds Banking Group PLC plunged 10% after the British bank swung to a first-half net loss. Royal Bank of Scotland Group PLC dropped 6.1% and Barclays PLC slumped 7.8%. Societe Generale SA slid 3.5% in Paris.

Mining company Rio Tinto PLC sank 5.4% after posting a 30% rise in first-half profit, but cited higher commodity prices and the effects of strong Australian and Canadian dollars. Among other mining companies, Xstrata PLC plunged 8.5%, BHP Billiton PLC sank 5.1%, and Anglo American PLC dropped 6.1%. Randgold Resources Ltd. gained 6.6% after posting upbeat results. Worries about global growth hit car stocks. Peugeot SA skidded 6.6% in Paris, and BMW AG slid 6.5% in Frankfurt.

Asian Market

South Korean and Australian stocks were among Asian markets ending sharply lower Thursday on fears about the U.S. economic outlook, but a key Japanese benchmark edged up after Tokyo intervened to stem the yen's appreciation. The Nikkei Stock Average overcame a lackluster start and rose more than 1% during the session, as the yen slumped against major currencies after the Finance Ministry intervened to curb its recent rise.

But the benchmark finished the day just 0.2% higher at 9,659.18, amid skepticism over whether the measures can keep the yen down for long and as the size of additional monetary easing announced by the Bank of Japan fell short of some expectations. Several major Japanese exporters got a lift from the news, with Toyota Motor rising 0.6%, Nikon adding 1.3% and Nintendo gaining 0.8%.

Elsewhere in Asia, South Korea's Kospi tumbled 2.3% to 2,018.47 for a third straight day of losses exceeding 2%. The day's performance gave the index a net loss of 1.6% in 2011 to date. Taiwan's Taiex shed 1.7% to 8,317.27, Hong Kong's Hang Seng Index dropped 0.5% to end at 21,884.74, and India's Sensex fell 1.4% to 17693.18. China's Shanghai Composite index ended 0.2% higher at 2,684.04.

Commodities

Copper slumped to its lowest close in five weeks on the London Metal Exchange Thursday as bearish comments by European Central Bank President Jean-Claude Trichet exacerbated persistent concerns over economic growth in the region, sparking a broad-based market slide and sending the euro firmly into the red. At the close, LME three-month copper was 1.8% lower at $9,355 a metric ton, its lowest closing price since June 29, while thinly traded tin fell the most, slumping 3.0% to $25,500/ton.

Crude oil futures prices shed more than 5% Thursday, plunging to their lowest level since February in a broad market sell-off spurred by intensifying fears that the world's major economies are stalling. Light, sweet crude futures for September delivery settled down $5.30, or 5.8%, at $86.63 on the New York Mercantile Exchange. That's the contract's lowest settlement since Feb. 18, when Libya's civil war had begun to intensify and the country's oil exports began coming off the market.

Brent crude on the ICE Futures Europe exchange settled down $5.98, or 5.3%, at $107.25 a barrel. Brent has been trading at a steep premium to Nymex crude for most of this year, but that gap shrunk on Thursday's sell-off.

Gold prices fluctuated by more than $40, reaching new highs in the morning before dropping back to nearly $1,640 a troy ounce, as a selloff across commodities and stocks had investors cashing out of precious metals. Brokers said some investors were selling gold to cover margin calls in the stock market.

The most actively traded gold contract, for December delivery, fell $7.30, or 0.4%, to settle at $1,659 a troy ounce on the Comex division of the New York Mercantile Exchange. It had reached a record high at $1,684.90 in the morning on concerns that the European Central Bank's action to prevent the debt crisis from spreading to Italy and Spain would reduce the value of currencies.

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