Blue-chip stocks suffered their biggest intraday drop since October as reports of Saudi police firing on protesters added a new worry to a day of broader economic concerns. The blue-chip index slipped under 12000 and was down 204 points, or 1.7%, to 12009 recently as the Associated Press reported that Saudi Arabian police fired on protesters in the country's east.

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The price of oil regained much of its early loss. No further details were available, but markets' swift reaction was a sign of how sensitive investors remain to indications of unrest in the oil-rich nation. Caterpillar led the Dow lower, falling 3.5%, and energy stocks were also weak as Exxon Mobil and Chevron each fell more than 3%. All of the Dow's components were in the red except for McDonald's, up 1.5%, and Wal-Mart Stores, up 0.4%. The Dow hasn't staged this big of an intraday drop since Oct. 19. The Standard & Poor's 500 stock index retreated 23 points, or 1.7%, to 1297 as its energy and financial components slumped.

The Nasdaq Composite fell 48 points, or 1.7%, to 2704. The Saudi reports came on a day when worries about European sovereign debt were back on investors' agenda. Moody's Investors Service downgraded Spain's government debt, sending overseas stocks tumbling. Also, China reported that export growth was the slowest since 2009 in February compared with the year-ago period. The market also got a disappointing read on the state of employment in the U.S. The Labor Department reported initial claims for unemployment benefits unexpectedly rose for the week ended March 5. Separately, the Commerce Department said the trade deficit hit its highest level in seven months.

European markets

European stock markets fell sharply Thursday as a downgrade of Spain's credit rating, weak Chinese economic data and continued fighting in Libya all contributed to the bearish sentiment. The Stoxx Europe 600 index sank 1.2% to end at 277.88. Spain's IBEX 35 index was among the worst-hit national indexes, falling 1.2% to 10,435.6, after Moody's Investors Service cut Spain's government debt by one notch to Aa2 from Aa1. Banking giants BBVA SA and Banco Santander dropped 1.7% and 1.4% respectively, leading the banking sector lower across Europe.

Also Thursday, Santander's CEO Alfredo Saenz was banned from banking for three months in a case dating back to 1994. Europe's losses came after big falls for most Asian markets after China unexpectedly posted a trade deficit in February. Moody's said its decision to downgrade Spain was based on its assessment that the country's bank restructuring will cost more than the government currently expects, which will lead to a further increase in the public-debt ratio. Banks with exposure to some of Europe's weakest economies were also big fallers, including Allied Irish Banks PLC, which dropped more than 7% in Dublin. In London, shares of insurance and investments group Standard Life PLC sank 7.3% after the group reported its 2010 earnings.

The stock was one of the biggest decliners on the FTSE 100 index, which closed down 1.6% at 5,845.29, as heavyweight mining stocks also fell sharply after the Chinese data. Shares in BHP Billiton sank 3.5% and Rio Tinto PLC fell 3.8%. The FTSE also held on to its losses after the Bank of England maintained its key interest rate at 0.5% and also kept the size of its asset-repurchase program steady at GBP200 billion. German chip maker Infineon Technologies AG fell 3.6%, pressuring the DAX 30 index, which dropped 1% to 7,063.09. The French CAC 40 dropped 0.8% to 3,963.99, with STMicroelectronics NV falling 3.8%.

Asian markets

Asian shares ended lower Thursday as escalating fighting in Libya and China's unexpected trade deficit for February sparked a selloff in the region. A Moody's downgrade of Spain's government-bond ratings also weighed on sentiment. China's Shanghai Composite lost 1.5%, Japan's Nikkei Stock Average declined 1.5%, South Korea's Kospi shed 1.0%, and Taiwan's Taiex slid 1.2%. The fall in Shanghai came after the country posted a $7.3 billion trade deficit in February, compared with expectations for a surplus, as exports and imports growth slowed sharply, bearing the impact from the Lunar New Year holidays during the month. Stocks suffered broad losses in Shanghai, with China Coal Energy falling 3%, Citic Securities dropping 4%, China Cosco Holdings losing 2.7% and Maanshan Iron & Steel sliding 2.3%. Hong Kong's Hang Seng index ended 0.8% lower and India's Sensex dropped 0.8%, with both extending losses in choppy trade after Moody's Investors Service lowered Spain's government-bond rating by one notch to Aa2 from Aa1, while also placing the new rating on a negative watch. Shares of Japan's Osaka Securities Exchange rallied 6.9% following reports that it will begin talks on integration with the unlisted Tokyo Stock Exchange.

Base metals

Base metals closed mixed on the London Metal Exchange Thursday, caught in a tussle between bearish macroeconomic signals and a strong dollar on the one hand and bouts of dip buying on the other. LME copper fared particularly badly, trading down 0.9% on the day at $9,191 a metric ton at the PM kerb close, underperformed only by lead, which closed 2.0% lower at $2,430/ton. Weaker than expected preliminary import data from China and a Spanish credit downgrade hit the base metals early on the day, while a strong U.S. dollar provided an additional headwind for the dollar-denominated complex. Crude futures pared early losses Thursday on reports of protests in Saudi Arabia, the world's largest oil exporter. Saudi police opened fire at a rally in the eastern part of the kingdom Thursday, the Associated Press reported, citing a witness in the city of Qatif. Light, sweet crude for April delivery settled $1.68 lower at $102.70 a barrel on the New York Mercantile Exchange. Gold prices declined as easing oil prices dimmed the metal's allure as a refuge investment and inflation hedge, and a stronger dollar also clipped demand. The most actively traded gold contract, for April delivery, fell $17.10, or 1.2%, to settle at $1,412.50 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby March gold also lost $17.10, to $1,412.20.

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