US Markets

It was another volatile session for U.S. stocks, which erased a steep loss late in the day Monday after reports that China may come to the aid of the embattled euro zone. The Dow Jones Industrial Average closed up 68.99 points, or 0.63%, at 11061.12, in choppy trading that had sent the measure down as much as 167 points before a burst upward in the last half hour of trading. The Standard & Poor's 500-stock index gained 8.04 points, or 0.70%, to 1162.27. The Nasdaq Composite rose 27.10 points, or 1.10%, to 2495.09.

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Traders late in the day cued off a report in the Financial Times that China was in talks with Italy for significant purchases of government bonds, which would help one of the most important of Europe's heavily indebted governments. Traders earlier in the day had been preoccupied with worries that Greece's sovereign-debt crisis was coming to a head. Technology stocks were a source of relative strength throughout the session.

Chip stocks fared especially well after Broadcom agreed to acquire NetLogic Microsystems for $3.7 billion. NetLogic soared 51%, while Broadcom shed 1.1%. Intel gained 2.9% to lead the blue-chip Dow, while Micron Technology led the S&P 500, gaining 5.3%. Earlier, U.S. markets reflected the same fears that caused a 2.5% drop in the Stoxx Europe 600. Helping sour sentiment in Europe was a statement by a German official that an orderly default for Greece could no longer be ruled out. French bank stocks plunged because of worries that Moody's Investors Service could downgrade them this week due to their holdings of Greek government debt.

European Markets

European stock markets ended lower Monday on increased fears that Greece is headed for default, as French banks led losses on speculation they could be downgraded over their exposure to that troubled euro-zone nation. The Stoxx Europe 600 index slid 2.5% to close at 218.93. The French CAC 40 index, which dropped 4% to close at 2,854.81, bore the brunt of Monday's losses with BNP Paribas SA plunging 12%, and Credit Agricole SA and Societe Generale SA each falling more than 10%. Insurer AXA SA slid 9.7%. Societe Generale released a statement Monday, trying to reassure investors over its exposure to Greek debt.

The firm also said it will free up EUR4 billion in capital by 2013 via business asset disposals. Meanwhile, fears that Greece may not meet the terms of its aid package have been growing and the cost of protecting European bank and government debt against default surged Monday.

Media reports said German officials have been meeting to figure out how to protect the nation's banks from a potential Greek default. The German DAX 30 index fell 2.3% to close at 5,072.33, with shares of Deutsche Bank AG sinking 7.3%. Commerzbank AG fell 8.3%. Jitters rattled throughout Europe's banking sector, with Italy's Unicredit SpA down 11% and Banco Santander SA down 4.7% in Madrid.

Italy's FTSE MIB index fell 3.9% and the Spain IBEX 35 index declined 3.4%. The Athens General Index fell 4.4%, with losses of nearly 8% for National Bank of Greece SA. Banks also fell in London as overall European bank sector weakness weighed, though generally losses were less severe. The FTSE 100 index fell 1.6% to settle at 5,129.62. Shares of Royal Bank of Scotland Group PLC fell 3.4%.

Asian Markets

Asian stock markets ended sharply lower Monday, with some shares hitting multiyear lows, after renewed fears over Europe's sovereign-debt crisis led to steep selling in U.S. and European markets at the end of last week. Japan's Nikkei Stock Average fell 2.3% to 8535.67, its lowest close since 2009, while Hong Kong's Hang Seng Index fell 4.2% to 19030.54.

Singapore's FTSE Straits Times Index fell 2.9% to 2743.58 and India's Sensex fell 2.2% to 16501.74. South Korean, Taiwanese and mainland Chinese markets were closed for holidays. Many financial shares, which are especially sensitive to European-debt developments, plunged in Asia Monday.

In Hong Kong, HSBC Holdings--which carries a heavy weighting on the Hang Seng Index fell 5.5% in morning trade, hitting a two-year low. Local worries about asset quality and possible fund-raising needs at Chinese banks also worked to pull mainland Chinese banks down, led by a 5.8% tumble by Agricultural Bank of China. Insurers also suffered severely in the financial sell-off in Hong Kong, with Ping An Insurance Group off 5.9%, China Life Insurance down 5.8%, and AIA Group 5.2% lower.

Japanese banks also fell sharply, with Mitsubishi UFJ Financial Group down 2.7%, while smaller rivals Shinsei Bank and Aozora Bank dropped 3.5% and 3.3%, respectively. Worse losses hit Japanese exporters with large European exposure: Sony shed 3.4%, Sharp tumbled 5% and Honda Motor fell 3.8%. Shares of Suzuki Motor finished down 2.6% after news that Volkswagen, with which Suzuki has a partnership, had accused it of violating the two car makers' agreement by procuring diesel engines from a third party. News reports shortly after the Tokyo market close cited Suzuki sources as saying the partnership would be cancelled.

Commodities

Base metals closed mixed on the London Metal Exchange Monday as traders wrestled with the impact of a fluctuating dollar, expectations of stronger demand and the deepening European debt crisis. Three-month aluminum closed the afternoon open outcry session at $2,375 a metric ton, up 0.3% on Friday's PM kerb close. Three-month nickel closed 2% higher at $21,575/ton, while three-month copper closed down 0.8% at $8,754.50/ton.

Crude futures settled higher Monday, as a rebound in the euro from session lows helped halt oil's earlier retreat amid Greek default fears. Light, sweet crude for October delivery settled 95 cents, or 1.1%, higher at $88.19 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange ended 55 cents lower at $112.22 a barrel.

After dropping nearly 2% early Monday, U.S. crude prices rebounded as traders betting on dropping prices locked in profits. The euro also rebounded from its overnight lows. Gold futures slid to a two-week low as investors sold their holdings in the metal to raise cash as mounting worries about Europe's debt crisis hit other markets. The most actively traded gold contract, for December delivery, fell $46.20, or 2.5%, to settle at $1,813.30 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest ending price since Aug. 29.