Dow Drops 520 Amid New Europe Debt Concern (Stephen Kirkland)

Aug 10, 2011 (Bloomberg) -- Stocks slid, dragging the Dow Jones Industrial Average to the lowest level since September 2010, and Treasuries rose for a third day amid concern the European sovereign debt crisis is worsening. The dollar climbed versus 13 of 16 major peers, with the euro losing 1.3 percent to $1.4186. Gold futures surged to a record above $1,800 an ounce.

The Dow sank 520.44 points, or 4.6 percent, to 10,719.33 at the 4 p.m. close in New York. The Standard & Poor’s 500 Index sank 4.4 percent to 1,120.72 following its biggest jump in more than two years yesterday, when it rebounded from its worst loss since 2008. The Stoxx Europe600 Index plunged 3.8 percent as Societe Generale SA sank 15 percent. Ten-year Treasury yields, which touched an all-time low yesterday, fell 18 basis points to 2.08 percent after an auction drew a record-low yield. Costs to protect French debt reached a record.

Central banks are fighting to prevent a recession as equities tumble the most since the bear market in 2008, with Federal Reserve Chairman Ben S. Bernanke vowing yesterday to keep borrowing costs at an all-time low to revive a recovery that’s “considerably slower” than expected. People familiar with the transactions said the European Central Bank bought Italian and Spanish bonds to help reduce borrowing costs. Switzerland’s central bank said today it will “significantly” increase the supply of liquidity to banks.

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