Dow flirts with 10,000 level as markets sink worldwide

The Dow Jones industrial average is closing in on 10,000 -- from the wrong direction.

Stock markets around the world plunged Thursday on concern over the mounting debt problems of several European governments as well as an unexpected rise in U.S. jobless claims.

The Dow tumbled more than 250 points -- coming within three points of closing below the 10,000 mark that it retook in October during its long climb back from the financial crisis.

In the final minutes of trading, the blue-chip gauge was briefly below 10,000, falling as low as 9,998.71. Investors were spooked in part by a Labor Department report showing that claims for first-time jobless benefits rose to 480,000 last week, exceeding the 455,000 that economists expected. The number seemed to dash hope that the January unemployment report to be released Friday would point to an improving job picture.

Major European markets plunged more than 2%, with shares in Spain sinking nearly 6%, as investors worried that the type of budgetary problems that recently erupted in Greece were also afflicting Spain, Portugal and other nations.

“The reality is that countries with budgets that are out of control or seriously compromised need to do much more efforts to fix their budgets, which means taking actions that will exacerbate the recessions going on all around Europe,” said Adolfo Laurenti, an economist at Mesirow Financial in Chicago.

The dollar strengthened and commodities weakened as investors sought safe havens.

The Dow closed down 268.27 points, or 2.6%, to 10,002.18 – its lowest point since Nov. 4. The Dow is off 6.7% since hitting its recent peak of 10,725 on Jan. 19.

The broader Standard & Poor’s 500 sank 3.1% and the Nasdaq composite index lost 3%.