Stocks lightened their losses but still are deeply in the red this morning amid fear that Europe’s lingering economic crisis is entering another dangerous phase.

Concern that Spain may need a bailout spooked investors worldwide as the country’s borrowing costs soared. European stock markts tumbled, with Asian and U.S. shares following in lockstep.

As of 9:30 a.m. Pacific, the Dow Jones industrial average was off 155.49 points, or 1.2%, to 12,667.08. The index was down nearly 240 points at its low point.

The Standard & Poor’s 500 index fell 19.45 points, or 1.5%, to 1,342.95. The Nasdaq composite index got hit the hardest, giving up 54.71 points, or 1.9%, to 2,870.59.

Yields on Treasury bonds fell to new lows amid an investor flight to quality. The yield on the 10-year note fell to a new low of 1.43%.

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