STOCKS fell around the world, the euro sank to a 20-month low against the United States dollar and oil retreated as the deepening economic slump sapped corporate profit.
Wachovia Corp, the bank being acquired by Wells Fargo & Co, sank 4.3 percent after reporting a wider-than-expected loss. Royal Bank of Scotland Group Plc dropped 9.8 percent and the pound tumbled to a five-year low after Bank of England Governor Mervyn King said the country probably is in a recession. BHP Billiton Ltd, the world's largest mining company, slipped 6.2 percent after saying "uncertainty" will persist in China as the economy slows.
The Standard & Poor's 500 Index lost 2 percent to 936.29 as of 9:31am in New York. The benchmark index for US equities has lost 36 percent this year and oil has tumbled more than 50 percent from its peak in July as concern deepened government bailouts to save the global banking system won't avert a recession, Bloomberg News said.
"We are still very cautious on the market," said Philippe Gijsels, Brussels-based senior equity strategist at Fortis Global Markets with US$62 billion under management. "You see the slowdown in companies and economies and this is only the beginning. You will see a very nasty shakeout." The final bottom in the market "will come far into 2009 or maybe into 2010" Gijsels said in a Bloomberg Television interview.
Europe's Dow Jones Stoxx 600 Index declined 3.6 percent. Tenaris SA and Repsol YPF SA fell as Argentina's planned seizure of pension funds stoked concern the nation is headed for its second default in a decade.
Borrowing costs for developing countries climbed to a five-year high, while Russia's ruble and the South Korean won slumped.