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US, European stocks sink on credit rating cut concerns

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A roundup of trading on major world markets:

NEW YORK – A warning that Moody’s Investors Service will review all the credit ratings of all European nations doused investors’ optimism about last week’s fiscal pact and sent stocks and other risky assets plunging Monday.

The Dow Jones industrial average dropped 222 points in midday trading. The euro fell more than one per cent against the dollar and the yields on Italian government bonds rose sharply as investors became more nervous about that nation’s debt burden. European stock indexes closed sharply lower.

Moody’s said last week’s summit of European leaders produced “few new measures” and that Europe remains in a “critical and volatile stage.”

The region remains “prone to further shocks and the cohesion of the euro under continued threat,” Moody’s said. As a result, the agency will review the creditworthiness of all European countries in the first three months of 2012.

Moody’s noted that the pact does not address Europe’s immediate problem: the crushing debt loads of some nations and their rising borrowing costs.

Moody’s said it would review ratings of all European Union nations early next year in light of the summit’s failure to come up with the measures it believed necessary to tame the eurozone debt crisis.

US stocks fell broadly, with declines for all 30 stocks in the Dow Jones industrial average and all 10 industry groups in the Standard & Poor’s 500 index.

The Dow fell 222 points, or 1.8 per cent, to 11,962 shortly before noon Eastern time. Intel Corp. fell 5.4 per cent after the chipmaker said a shortage of hard drives will limit shipments, pushing its fourth-quarter revenue outlook far below what Wall Street had expected.

The Standard & Poor’s 500 index fell 26 points, or 2.1 per cent, to 1,229. The Nasdaq composite index dropped 51 points, or 1.9 per cent, to 2,595.

LONDON – European stock markets and the euro have tumbled as Moody’s warned it will review all EU credit ratings after member states failed to deliver decisive measures to fix the eurozone crisis.

In London, the FTSE 100 index of top shares fell 1.83 per cent to 5,427.86 points, in Paris the CAC-40 slumped 2.61 per cent to 3,089.59 points and Frankfurt’s DAX 30 tumbled 3.36 per cent to 5,785.43 points.

Milan lost 3.79 per cent and Madrid was down 3.11 per cent.

HONG KONG – Asian markets were mixed on Monday as optimism over last week’s European plan to introduce tougher fiscal rules to save the eurozone were weighed by lingering concerns leaders may not have done enough.

Tokyo rose 1.37 per cent, or 117.36 points, to 8,653.82, Sydney closed 1.18 per cent stronger, rising 49.8 points to 4,252.8 and Seoul added 1.33 per cent, or 25.01 points, to close at 1,899.76.

In the afternoon Hong Kong closed flat, edging down 10.57 points to 18,575.66 and Shanghai slipped 1.02 per cent, or 23.72 points, to 2,291.55. The two bourses were also weighed by lingering concerns over China’s slowing growth..

WELLINGTON – New Zealand shares rose on Monday, joining a global rally on optimism the European Union will make progress in addressing the region’s debt crisis after its weekend summit.

The NZX 50 Index gained 28.04 points, or 0.9 per cent, to 3299.51. Within the index, 30 stocks rose, eight fell and 13 were unchanged. Turnover was $71 million.