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Global Stocks Take Another Beating; Dow Sinks

U.S. stock prices slid near the end of trading Monday amid growing concerns about the severity of a global economic slowdown and the bleak outlook for corporate profits.

The Dow Jones industrial average fell 203.18 points, or 2.42 percent, to close at 8,175.77. The Standard & Poor's 500 index was down 27.83 points, or 3.17 percent, to finish at 848.94. The Nasdaq composite index was down 46.13 points, or 2.97 percent, to 1,505.90.

Early in the day, Wall Street investors appeared to be encouraged by a report that said sales of new homes rose an unexpected 2.7 percent in September, but enthusiasm seemed to flag during the last half-hour of the trading day.

Among the big losers were energy companies and commodity producers, which have lost steam recently because the slowdown in the global economy threatens to reduce the demand for the products they sell.

Oil Drops On Waning Demand

Shares of energy companies dropped on the bet that a slowing economy will hurt energy demand. ConocoPhillips slipped 5.8 percent to $45.62 as U.S. crude oil futures fell below $64 a barrel.

Falling crude oil prices and dropping petroleum demand pushed down gasoline costs, which have declined 98 cents in the past month. The average U.S. retail gasoline price fell 26 cents over the past week to $2.66 a gallon, the cheapest pump price since March 2007, the Energy Department said Monday.

Meanwhile, the U.S. Treasury announced that the government would launch its opening gambit in the $700 billion bailout by buying $125 billion worth of shares in nine major banks this week. The move is designed to bolster the banks' balance sheets so they will begin more normal lending, a Treasury official said.

Monday's sell-off followed sharp declines in Asian markets. Tokyo's Nikkei 225 index closed down 6.4 percent at 7,162.90 — the lowest since October 1982. Hong Kong's Hang Seng index tumbled 12.7 percent to 11,015.84, its biggest daily decline in 17 years.

The yen soared as investors sought safe-haven currencies, but the rise in the currency means Japanese exports will be less competitive, further hurting the country's manufacturers.

The world's seven leading industrial nations on Sunday issued a statement warning about the "recent excessive volatility" in the value of the Japanese currency, which is trading close to 90 yen to the U.S. dollar, near 13-year highs.

European, U.S. Stocks Follow Asia Down

European markets followed Asia lower, with benchmarks in Britain, Germany and France trading down. Shares on the FTSEurofirst 300 index dropped nearly 4 percent, led by banking stocks and energy companies, which took a hit from oil prices tumbling to a 17-month low.

On Monday, interbank lending rates edged lower, following a significant drop last week that was thought to signal a general thawing of logjammed credit markets.

The LIBOR, or London Interbank Offered Rate — which is the interest U.K. banks charge for unsecured loans to other banks — edged lower for three-month loans in dollars, down to 3.51 percent from 3.52 percent Friday. The so-called European Interbank Offered Rate for three-month euro-denominated loans has eased to 4.912 percent from 4.918 percent.

Bailout For Hungary

The repercussions of the financial crisis have been especially profound for Eastern Europe's developing nations. The International Monetary Fund said Hungary is close to receiving a financial bailout package for its troubled economy, an announcement that helped boost its flagging currency, the forint.

The IMF says it has reached a "broad agreement" with Hungary on a "substantial financial package."

The deal will be announced in the next few days and will include participation of the European Union, individual European governments and other institutions, the IMF said.

The forint rose slightly Monday morning against the euro, but the benchmark index of the Budapest Stock Exchange was down 10 percent.

From NPR and wire reports

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