(Repeats to more subscribers)
* Dow falls 300 points, S&P 500 down 2.7 pct
* Yen slides after
Tokyo intervenes
*
ECB in the market buying bonds - traders (Updates to afternoon)
By Edward Krudy and Rodrigo Campos
NEW YORK, Aug 4 (Reuters) - World stocks plunged to new lows for the year on Thursday with a sell-off in markets accelerating sharply as
investors fretted about the outlook for the global economy and piled into safe-haven bonds.
European stocks tumbled to a level not seen since after the financial crisis in mid-2009, with
Italy's equity market firmly in bear market territory, down nearly 30 percent since February, as investors fretted the euro-zone debt crisis was spreading.
Italy's blue-chip
FTSE MIB index <.FTMIB> was suspended about 30 minutes before the close. The index tumbled slightly more than 5 percent.
With investors seemingly caught in a perfect storm, officials around the world moved to calm markets and ease volatility. The boldest step came from Tokyo, where the government spent an estimated 1 trillion yen ($13 billion) to stem the strength of its currency.
The intervention comes a day after an unexpected cut in interest rates by Switzerland to weaken the franc, which has spiked in recent days as investors search for safe havens. The currency edged slightly higher in
New York trade on Thursday.
Even gold, which has raced to a series of new highs near $1,700 an ounce amid the gathering uncertainty, tumbled as deepening losses on
Wall Street prompted investors to sell the metal and cover losses amid increasing margin calls outside of the commodity sector.
"When you get outside markets down significantly, some investors liquidate their winning positions in the gold and silver market longs to raise margins and support their losing trades," Phillip Streible, senior market strategist with
Chicago-based futures broker
MF Global.
The selling "is across market segments in terms of institutions, individuals, and traders," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey. "Everyone is leaning into it. It's a classic capitulation."
The exodus from stocks pushed the broad Standard & Poor's 500 Index <.SPX> down as much as 3.5 percent, while the clamor for safe-haven investments drove the yield of the 10-year U.S. Treasury note below 2.5 percent, the lowest since early November 2010.
The Dow Jones industrial average <.DJI> dropped 300.69 points, or 2.53 percent, to 11,595.75. The Standard & Poor's 500 Index <.SPX> fell 34.46 points, or 2.73 percent, to 1,225,88. The Nasdaq Composite Index <.IXIC> dropped 72.90 points, or 2.71 percent, to 2,620.17.
The MSCI world equity index <.MIWD00000PUS> was down 3.2 percent for the day, its largest daily fall in a year, and hit a fresh 2011 low.
European stocks <.FTEU3> lost 3.3 percent.
Safe-haven assets like the Swiss franc, the yen and gold have spiked this week as investors fret that governments around the world are planning spending cuts at a time of slowing global economic growth. Government moves are seen as just temporarily reversing the trend.
The latest spate of economic data points to slowing demand in the United States, while the euro zone grapples with the spread of its debt crisis to Spain and Italy, where borrowing costs have increased sharply.
The Dow Jones industrial average <.DJI> dropped 277.01 points, or 2.33 percent, to 11,619.43. The Standard & Poor's 500 Index <.SPX> fell 31.74 points, or 2.52 percent, to 1,228.60. The Nasdaq Composite Index <.IXIC> dropped 68.32 points, or 2.54 percent, to 2,624.75.
The MSCI world equity index <.MIWD00000PUS> was down 3.2 percent Fon the day, its largest daily fall in a year, and hit a fresh 2011 low.
European stocks <.FTEU3> lost 3.3 percent.
The benchmark 10-year U.S. Treasury note rose a little more than a full point to yield 2.50 percent, a level not seen since early November 2010.
The European Central Bank kept interest rates unchanged on Thursday, but traders said the central bank has been buying bonds of peripheral euro-zone countries in an effort to keep rates lower.
German Bunds gained, while Italian and Spanish government bond yields rose in volatile trade on Thursday, after a euro- zone monetary source said the European Central Bank was only planning to buy Portuguese and Irish bonds. For more see [ID:nR1E7IF024].
Markets were unconvinced the ECB bond buying will be effective in stopping contagion and some were disappointed that Italian and Spanish bonds, whose yields climbed above 6 percent recently, were not the target of the purchases.
"It wasn't a unanimous decision to (buy bonds). (ECB President Jean-Claude) Trichet looked really uncomfortable saying it," one trader said.
"The market, obviously, dismissed it pretty rapidly," another trader said.
Brent fell more than 3 percent and U.S. crude lost 4.8 percent, or $4.51 to $87.42 a barrel. Copper prices dropped 1.8 percent. (Additional reporting by Julie Haviv, Marius Zaharia and Emelia Sithole-Matarise; Editing by Jan Paschal)
