Stocks Plummet in Global Market Rout

NEW YORK (Reuters)- Stocks slid more than 6 percent on Monday, with the Dow diving to itslowest level in almost five years, on fears the global economy washurtling into recession despite government efforts to contain thefast-spreading financial crisis.

Wall Street’s drop was part of a global sell-off, and as severe asthe U.S. losses were, they paled in comparison to sharp declines acrossEurope and in emerging markets. In Russia, Brazil and Peru, trading wastemporarily suspended.

The emergency rescue of two big European banks and a move by severalEuropean governments to guarantee bank deposits intensified fears of apotential global recession.

The sharp drop came in the first session since the U.S. Congressapproved a $700 billion bailout of the financial industry. Financialservices stocks led the sell-off, with the S&P’s financialsub-index down 8 percent.

Energy companies’ shares plummeted as the price of oil dropped to an8-month low below $90 a barrel on expectations the growing financialcrisis will further slow already faltering global fuel demand.

"The economy, the global economy is a worry, with credit tight andeveryone hoarding cash," said Neil Massa, senior U.S. trader at MFCGlobal Investment Management.

"The global markets are worse than even we are and that’s not good news for any companies that depend on the overseas markets."

The Dow Jones industrial average fell 711.01 points, or 6.89percent, to 9,614.37. It is the first time the Dow has traded below9,700 for the first time since November 2003.

The Standard & Poor’s 500 Index skidded 82.19 points, or 7.48percent, to 1,017.04, while the Nasdaq Composite Index slid 158.73points, or 8.15 percent, to 1,788.66.

In the latest twist in the fast-changing U.S. financial landscape,Citigroup said it is suing Wachovia and Wells Fargo and is seeking morethan $60 billion in damages over Wells Fargo’s competing bid forWachovia.

Wells Fargo slipped 7.1 percent to $32.29, Wachovia shares dropped 5 percent to $5.90 and Citigroup lost 11.4 percent to $16.26.

Among other financial shares, Bank of America fell 8.6 percent to$31.50 after the bank agreed to settle claims brought by U.S.attorneys-general regarding risky loans originated by mortgage lenderCountrywide Financial in a deal that could be worth more than $8.6billion.

Traders speculated the sell-off might spur global central banks tocoordinate interest-rate cuts to shore up investor confidence, but noteveryone thought that would make a significant difference.

"I don’t even think that a rate cut now will have much effect otherthan some psychological effect," said Subodh Kumar, chief investmentstrategist at Subodh Kumar & Associates in Toronto, Canada.

Among shares of energy companies, Exxon Mobil Corp fell 3.9 percentto $74.80, while shares of Chevron Corp lost 7.1 percent to $73.71.

U.S. front-month crude tumbled $5.88 to $88.00 a barrel.

Shares of General Electric, a diversified manufacturer and economic bellwether, dropped 10.6 percent to $17.42.

Technology companies, which often have significant overseasexposure, slid sharply. Shares of Oracle Corp, the world’sthird-largest software maker, slid 9 percent to $17.73.

To stave off the widening credit turmoil in Europe, Germany, Austriaand other governments pushed to reassure depositors about their funds.

(Editing by Jan Paschal)