US Markets

U.S. stocks dropped Thursday after three days of sharp gains as Warren Buffett's $5 billion investment in Bank of America failed to stoke investors' appetite for risk ahead of Federal Reserve Chairman Ben Bernanke's speech Friday. The Dow Jones Industrial Average dropped 170.89 points, or 1.51%, to 11149.82, in a broad decline. All but two of the Dow components dropped.

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Bank of America bucked the trend, rising 66 cents, or 9.4%, to $7.65 after Buffett's disclosure, although at one point it gained as much as 26%. The Standard & Poor's 500-stock index lost 18.33 points, or 1.56%, to 1159.27. All 10 of the S&P 500's sectors finished in the red, led lower by energy and consumer discretionary stocks. The Nasdaq Composite fell 48.06 points, or 1.95%, to 2419.63, as the resignation of Apple Chief Executive Steve Jobs weighed on the technology sector. Shares of Apple fell 2.46, or 0.7%, to 373.72 after Jobs said late Wednesday he was resigning as CEO. The stock dropped as much as 3% before paring losses.

Stocks opened higher Thursday, with the Dow rising as much as 86 points. But the market quickly lost its early gains and turned sharply lower following big declines in European equities. Germany's DAX index slumped amid concerns that a ban on short selling in some European markets could be extended to that country. Investors also worried about the condition of Harrisburg, Pa. The financially strapped state capital will likely miss a bond payment next month if a deal to secure a $7.5 million loan falls through, a spokesman for the mayor said Thursday.

European Markets

European stocks closed lower Thursday, breaking a three-session winning streak after abruptly changing direction in afternoon trading amid speculation that Germany would introduce a ban on short-selling financial shares. The Stoxx Europe 600 index dropped 1.2% to 227.07. Germany's DAX 30 index closed down 1.7% at 5584.14. The DAX had slumped 4% at one point in the session, hit by several unconfirmed market rumors.

German regulator Bafin later said that there are no planned changes to its short-selling rules. France, Italy and Spain did announce they were extending bans on short-selling financial shares, while Belgium's stock market regulator which had imposed an indefinite ban two weeks ago said it would lift the short-selling ban only when market conditions allow. Latif also noted that there were unsubstantiated rumors that Germany's credit rating may be downgraded. Credit-rating firms Standard & Poor's, Moody's and Fitch all confirmed Germany's triple-A rating.

The biggest decliners on the DAX were utility RWE and chemical giant BASF, which fell 3.9% and 3.3%, respectively. Premier Oil was the biggest decliner on the Stoxx 600, falling 9.7% in London after the firm's six-month results raised concerns about its ability to meet 2012 production targets. Investors were also looking toward Friday's speech in Jackson Hole, Wyo., by Federal Reserve Chairman Ben Bernanke. In Athens, bank shares fell sharply. Alpha Bank dropped 9.1%, EFG Eurobank Ergasias fell 5.6% and National Bank of Greece slumped 4.8%. The losses came amid worries over Finland's insistence on getting collateral in exchange for participating in Greece's second bailout, which has been criticized by other euro-zone nations. Apart from Greek banks, many European financial shares registered gains Thursday. Credit Agricole rallied 4.8% in Paris. The bank said second-quarter net profit fell 11%, hurt by its exposure to Greece, but the results were better than analysts expected.

Other French banks also advanced, with Societe Generale gaining 2.6% and BNP Paribas adding 2.7%. Still, France's CAC 40 index fell 0.7% to 3119, dragged lower by media conglomerate Vivendi, which dropped 3.3%. Bank shares also advanced in London. Barclays surged 5.6% and Royal Bank of Scotland Group rose 5.5%. Despite these gains, the FTSE 100 fell 1.4% to 5131.10, pressured by a 5.5% drop by insurer Admiral Group.

Asian Markets

Asian stock markets ended mostly higher Thursday on robust corporate results and optimism the Federal Reserve will take steps to stimulate the U.S. economy, although some technology shares were subdued after Steve Jobs resigned as Apple's chief executive. Japan's Nikkei Stock Average ended the day 1.5% higher at 8772.36, China's Shanghai Composite Index jumped 2.9% to 2615.26 and Hong Kong's Hang Seng Index advanced 1.5% to 19752.48. South Korea's Kospi rose 0.6% to 1764.58. On the down side, Taiwan's Taiex declined 1.2% on losses in technology stocks, and India's Sensex fell 0.9% to 16146.33. The day's broad gains came ahead of a keenly awaited speech by Fed Chairman Ben Bernanke Friday, amid speculation he'll hint at further monetary stimulus to support the U.S. economy.

In Hong Kong, telecommunications major China Unicom Hong Kong and local lender BOC Hong Kong Holdings soared 12% and 5.8%, respectively, after each reported half-year results that beat analysts' expectations. Also rising on the back of results, energy major Cnooc climbed 3% and Bank of China gained 0.7%. Their gains more than offset weakness in China Life Insurance, down 3.8% on top of Wednesday's 12% plunge, which followed its reporting a sharp decline in profits.

Acer tumbled by the day's 7% limit in Taipei after posting a second-quarter loss and saying it now also expects a loss for the year, reversing its earlier forecast for a profit. Shares of some Apple suppliers underperformed, with Hon Hai Precision Industry down 4.6% and Catcher Technology down 6.8% in Taipei. Hong Kong-listed Foxconn International Holdings rose 0.9%, trailing the broad market. Meanwhile, some Apple competitors were higher. Among smartphone makers, Samsung Electronics jumped 2.4% in Seoul and HTC rose 1.4% in Taipei.

Commodities

Copper closed above $9,000 a metric ton for the first time in almost three weeks on the London Metal Exchange Thursday as the complex moved higher amid tentative economic confidence and thin trading conditions. At the close of open outcry trading, LME three-month copper was trading at $9,030/ton, up 1.8% on the day. Aluminum lagged the complex, ending the day just $1 higher at $2,365/ton, continuing a recent trend of falling behind amid broad moves higher. Crude oil futures prices settled modestly higher Thursday, pulled up by gasoline futures, which soared 3.1% on fears that Hurricane Irene could disrupt supplies along the East Coast.

The National Hurricane Center said Hurricane Irene, packing 115 miles-per-hour winds, remains on a track that will bring it to the North Carolina coastline by Saturday morning at major hurricane strength, then skirt the eastern seaboard and approach the southern coastline of New Jersey by Sunday morning. A direct hit on New York City is possible later Sunday, the NHC said. Light, sweet crude oil for October delivery settled 14 cents higher, at $85.30 a barrel on the New York Mercantile Exchange. ICE Brent crude for October delivery settled 47 cents higher, at $110.62 a barrel.

Gold futures snapped their two-day sell-off, rising as traders viewed the market's steep declines as an opportunity to buy and as falling equities markets renewed investor demand for refuge assets. The most actively traded gold contract, for December delivery, rose $5.90, or 0.3%, to settle at $1,763.20 a troy ounce on the Comex division of the New York Mercantile Exchange.