US markets

U.S. stocks slumped Monday, as another round of anxiety over Europe's debt crisis spurred investors to flee risky assets such as stocks. The Dow Jones Industrial Average dropped 151.44 points, or 1.2%, to 12505.76, as investors rushed for the dollar, gold and other perceived safe havens. The Standard & Poor's 500-stock index slid 24.31 points, or 1.8%, to 1319.49, with all sectors in the red. The Nasdaq Composite tumbled 57.19 points, or 2.0%, to 2802.62. Euro-zone anxieties widened beyond Greece as a panic over Italy's government debt and banking sector Monday triggered a 4% drop in Italy's FTSE MIB stock index.

Spain was also in focus after the new leader of the Castilla La Mancha region said the area's government has a budget deficit more than twice as large as previously thought. Italian and Spanish yields jumped to euro-era records. The latest euro-zone developments spurred worries that the continent's debt crisis is spiraling out of control, threatening to create a wider emergency for global markets. The selloff overshadowed investors' hopes for U.S. corporate earnings season, which kicked off unofficially after Monday's close.

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Financial stocks led the S&P 500 lower as investors' euro-zone worries were trained sharply on the banking sector. Material and energy stocks, considered riskier segments of the market, also posted large declines. Bank of America fell 35 cents, or 3.3%, to 10.35, and J.P. Morgan Chase dropped $1.31, or 3.2%, to 39.43, to lead the blue-chip Dow's decliners.

Hewlett-Packard fell 1.14, or 3.1%, to 35.29. Alcoa was another weak blue-chip stock, falling 47 cents, or 2.9%, to 15.91, ahead of its quarterly earnings report which came after the market close and showed the company's second-quarter earnings more than doubled on continued growth in prices and volume.

Profit totaled $322 million, or 28 cents a share, up from $136 million, or 13 cents a share, a year earlier. Alcoa's latest results include restructuring charges and other special items, excluding which income from continuing operations would have been 32 cents a share. Revenue increased 27%, to $6.59 billion.

European markets

European stock markets fell sharply Monday, led lower by banking and insurance shares as fears that the euro-zone debt crisis is spreading to Italy spooked investors. The Stoxx Europe 600 index dropped 1.4% to end at 269.90. BNP Paribas SA dropped 6.8% in Paris, Commerzbank AG fell 8.6% in Frankfurt, and Dexia SA slumped 8% in Brussels.

Italian lenders extended the sector's heavy losses from Friday, when some shares were briefly suspended due to tumbling prices. Shares of Intesa Sanpaolo SpA fell 7.7%, having slumped 14% over the previous week as Italy's cost of borrowing rose and amid worries over the outcome of stress tests for major European banks.

Banking group UniCredit SpA also retreated, down 6.3% after a volatile session. Italy's FTSE MIB index dropped 4% to 18,295.19. The index fell more than 7% last week. Top officials from the European Commission and the European Central Bank held a coordination meeting Monday to discuss a new aid program for Greece and recent developments in the euro area. The meeting came ahead of Monday's gathering of the euro group. Separately, Italian regulators over the weekend introduced emergency short-selling disclosure rules to try to curb the recent volatility.

Other peripheral markets were also down sharply. The Greek ASE Composite dropped 2.6% to 1,218.88, following a Financial Times report that European officials are now willing to accept some form of Greek debt default as part of a new bailout plan. EFG Eurobank Ergasias slumped 7.9%. Spain's IBEX 35 index fell 2.7% to 9,670.60, while Portugal's PSI 20 slumped 4.3% to 6,844.98. Outside of the financial sector, shares of French car maker Renault SA dropped 3.5% after it reported a 1.9% increase in total first-half vehicle sales but said supply constraints had hurt sales in its core European market. Rival PSA Peugeot Citroen fell 3.8% after the Renault update, helping pull the French CAC 40 index down 2.7% to 3,807.51.

In Germany, shares of pharmaceutical and chemical producer Bayer AG dropped 2.3%. The company said late Friday that the European Patent Office has decided to revoke its formulation patent for the contraceptive marketed under the name Yasmin. The DAX 30 index fell 2.3% to 7,230.25. The U.K.'s FTSE 100 index closed down 1% at 5,929.16, with losses limited by a 2.6% gain in shares of International Power PLC.

Asian markets

Most Asian markets sank on concerns about the region's exports after a dismal U.S. jobs report Friday, though Chinese stocks inched up amid hopes Beijing will show a measured response to last month's jump in inflation. A major factor was a surge in pork prices, which are expected to retreat as farmers respond by raising production.

Many of the region's financial stocks, especially those in Hong Kong, were hit as the market worried that Greece's sovereign-debt troubles will spill over to Italy. Japan's Nikkei Stock Average ended the day 0.7% lower at 10069.53, South Korea's Kospi shed 1.1% to 2157.16 and Taiwan's Taiex slid 1% to 8665.85. Many banks lost ground around the region, with Mitsubishi UFJ Financial Group down 1.4% in Tokyo and HSBC Holdings PLC dropping 1.6% in Hong Kong.

One bright spot on the Japanese market was Fukushima Daiichi nuclear-plant operator Tokyo Electric Power, which added 7.3% after some fresh details on the government's planned stress tests of nuclear-power facilities. The tests will be conducted in two stages, with the first stage covering currently idled facilities, according to reports Monday.

Mainland Chinese stocks bounced off the day's lows in spite of nervousness over weekend data that showed a jump in pork prices boosted food prices and overall inflation in June. The day's gainers in China included SAIC Motor, up 1.9%, and Qingdao Haier, up 2.5%. But many banks and property stocks were weaker, with China Construction Bank off 2.2% in Hong Kong and 0.2% in Shanghai; Guangzhou R&F Properties down 3.8% in Hong Kong and China Vanke off 0.8% in Shenzhen.

Base metals

Base metals closed lower on the London Metal Exchange Monday amid broadly weak risk sentiment, and while encouraging fundamental news cushioned flagship copper's slide somewhat, analysts warned that deeper losses could be around the corner for the red metal. LME three-month copper ended the session 0.9% lower at $9,570 a metric ton, its losses cushioned by a spate of encouraging fundamental indicators.

Crude-oil futures sank Monday as the dollar surged due to Europe's mounting debt crisis, while signs of weakening crude-oil demand emerged from China. Light, sweet crude oil for August delivery settled down $1.05, or 1.1%, at $95.15 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE futures exchange traded down $1.55, or 1.3%, at $116.78 a barrel.

The most actively traded gold contract, for August delivery, gained $7.60, or 0.5%, to $1,549.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded July-delivery gold settled up $7.60, or 0.5%, at $1,548.80 a troy ounce.

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