New York :  Global stocks tumbled while the British pound and the euro took a battering as Europe's debt crisis spurred another market rout yesterday.

The Standard & Poor's 500 Index fell 3 per cent before paring losses to 0.8 per cent as of 11.22am in New York. The MSCI World Index sank 1.7 per cent and the Stoxx Europe 600 Index plunged 3.9 per cent to 237.19 at 4.47pm in London, the biggest drop since March 2009. The gauge has retreated 8.7 per cent over the week, the biggest slump since Nov-ember 2008.

The 10-year Treasury note's yield slipped two basis points to 3.41 per cent. Greece led a drop in bonds of debt-laden nations, with the 10-year yield premium demanded to own the securities instead of benchmark German bunds rising to a record of more than 9 percentage points.

The pervasive fear crossed over into Asia as well, with the MSCI Asia Pacific Index slumping to a 10-week low. Japan's Nikkei sank 3.1 per cent as the yen strengthened against the euro and the dollar, South Korea's Kospi slumped 2.2 per cent, while Australia's S&P/ASX 200 declined 2 per cent.

China's Shanghai Composite lost 1.9 per cent, and Taiwan's Taiex also fell 0.2 per cent. Hong Kong's Hang Seng retreated 1.1 per cent. India's stocks fell to the lowest in more than two months, with the BSE Sensex losing 1.3 per cent to close at 16,769.11.

US regulators are reviewing a plunge that briefly wiped out more than $1 trillion (Dh3.6 trillion) in market value on Thursday as the Dow Jones Industrials Average slid almost 1,000 points before paring losses. The New York Stock Exchange switched from electronic matching to auctions during the slide, encouraging some sell orders to flow to smaller exchanges that had few if any buyers. Concern over the integrity of trading systems overshadowed government data showing the biggest jobs growth in four years.

"It's a confidence crisis," said Quincy Krosby, chief market strategist for New Jersey-based Prudential Financial, which oversees about $667 billion. "You've got yourself in a vortex of negativity in Europe. In the US, the investigation on Thursday's trading is definitely an overhang. It's a very precarious scenario. The market is waiting for a viable solution."

Stocks have been pummelled the last two weeks amid concern European leaders won't do enough to keep the most indebted nations from defaulting after a 110 billion-euro (Dh514.3 billion) rescue package for Greece failed to halt a rise in government borrowing costs. The Stoxx 600 has tumbled 12 per cent from its high for the year last month.

The euro fluctuated after falling to a 14-month low against the dollar on Thursday. The pound fell to the lowest in more than a year against the dollar as results from the UK election put the Conservatives on course to win the most seats, without gaining an overall majority, fuelling concern a new government won't be strong enough to tackle the budget deficit.

The bond and stock market turmoil is spilling over into money markets. Overnight deposits at the European Central Bank rose to a 10-month high as the sovereign debt crisis made commercial banks reluctant to lend to each other. Banks lodged 290 billion euros in the ECB's overnight facility at 0.25 per cent on Thursday, up from 288 billion euros the previous day.

Oil drop continues as gold price fluctuates

Oil fell for the fourth day in a row yesterday, dropping more than 2 per cent. US crude oil futures were down $1.96, or 2.54 per cent, at $75.15 a barrel by 10.45am EDT (1445 GMT), having risen as high as $78.19 earlier.

The day's low extended to $74.51, lowest since February 16 and losses in four sessions have reached nearly $12, or 13.6 per cent.

London Brent crude fell 72 cents to $79.11 a barrel.

"After yesterday's wild ride across markets, there isn't a good feel on how to react. But generally, oil prices have been backing away from the 19-month high above $87," said Gene McGillian, analyst at Tradition Energy, in Stamford, Connecticut.

Oil turned negative earlier after US April jobs data showed that non-farm payrolls grew at the fastest pace in four years, although the overall jobless rate remained at a high 9.9 per cent, compared with 9.7 per cent in March. "The US non-farms payroll were somewhat positive but the jobless rate up to 9.9 per cent perhaps turned us back down," said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York. "The dollar strengthened and oil came off." Oil prices have lost further ground from a 19-month high hit on Monday, following a plunge in global markets due mainly to concern over the Greek debt crisis.

Gold fluctuated in New York, heading for the third straight weekly gain, on speculation that Europe's fiscal crisis will spur investors to purchase the metal as an alternative to currencies. Gold touched $1,211.90 yesterday, 1.3 per cent shy of the December 3 record. "Gold is the first level of safe-haven appeal," said Adam Klopfenstein, a senior market-strategist at Lind-Waldock in Chicago.

- Reuters