Stocks plummet on economic worries

Stock markets plunged this morning with fears about the European

economy and a Korean military confrontation driving the Dow Jones

industrial average below 9900.

The Dow had fallen 2.2%, or 217.80 points, at mid morning and other

indexes fell even more sharply. The Nasdaq composite index was down

2.37% or 52.56 points to 2160.99.

The rough opening came in the middle of a tumultuous day of trading in

Europe and Asia.

Fears about the health of the European Union’s economy were stoked

when four Spanish banks announced late Monday that they were planning

to merge just a few days after the Spanish government bailed out

another leading Spanish bank. The leading Spanish index of stocks was

down 3.6% on Tuesday, and around the world shares in financial

institutions were among the biggest losers.

The European currency dropped in value against the dollar after three

stay days of steady gains, falling to $1.22.

“The market is trying to price in the worst-case scenario right now,

of not only lending freezing, but of a major bank becoming insolvent,”

Art Hogan, the chief equities strategist at Jefferies Group Inc. told

Bloomberg.

Markets also responded to news that North Korea was making

preparations for war with South Korea after a confrontation over a

torpedoed South Korean submarine. The Japanese Nikkei index was down

3.1%.