GLOBAL MARKETS-Stocks, euro slide on euro zone worries

NEW YORK (Dec 19): World equity markets slid on Monday and the euro fell
as investors turned cold on efforts in Europe to tighten euro zone
fiscal rules to prevent the region's debt crisis from deepening, which
would throttle global growth.

Adding to the sour sentiment,
European finance ministers looked unlikely to reach a target to boost
resources from the International Monetary Fund by up to 200 billion
euros after Britain declined to take part in a plan to help the euro
zone.

U.S. stocks skidded about 1 percent and European shares
closed lower in thin trade as weak Chinese housing data also fueled
worries about demand and hurt mining stocks.

The fading of
optimism about a solution to the euro zone debt crisis came as the
finance ministers assessed plans for a new "fiscal compact" they hope to
wrap up by the end of January.

Comments by Mario Draghi,
president of the European Central Bank, also weighed on sentiment after
he said the euro zone's economic outlook faced substantial downside
risks. He also said that 2012 would be a difficult year for banks.

Shares of the biggest U.S. financial institutions dropped sharply, with
Bank of America Corp closing below $5 a share for the first time since
the depths of the market's downturn during the financial crisis in March
2009.

Citigroup Inc fell 4.7 percent to $24.82.

"If you
add up all the factors facing banks, this just isn't a good environment
for financials, and since the lion's share of the worry in the market
is related to financials, a bad deal for them means a bad day for
everyone," said Mike Shea, managing partner and trader at Direct Access
Partners LLC in New York.

The Dow Jones industrial average
closed down 100.13 points, or 0.84 percent, at 11,766.26. The Standard
& Poor's 500 Index'' fell 14.31 points, or 1.17 percent, to
1,205.35. The Nasdaq Composite Index'' slid 32.19 points, or 1.26
percent, to 2,523.14.

In Europe, the FTSEurofirst 300 index of
top regional shares fell 0.1 percent to close at 957.45 points. Global
equities as measured by MSCI's all-country world index ''fell 1.2
percent.

Concerns about the debt crisis kept the euro near
11-month lows, while the dollar got a safety bid as investors reacted to
the uncertainty created by the death of North Korean leader Kim
Jong-il.

The euro also came under pressure after Fitch warned
late Friday that it could downgrade France and six other euro zone
countries because a comprehensive solution to the debt crisis is
"technically and politically beyond reach."

The euro lost almost 0.4 percent at $1.2994 versus the dollar. It hit an 11-month low last week of $1.2945.

U.S. government debt prices rose as the declines in equity markets boosted the bid for safe-haven U.S. government debt.

The benchmark 10-year U.S. Treasury note was up 12/32, the yield at 1.81 percent.

Oil prices pared gains, with U.S. crude near flat. Brent crude futures
rose 29 cents to settle at $104.64 a barrel. U.S. crude futures settled
up 35 cents to $93.88 a barrel.

U.S. gold futures for February delivery closed down $1.20 an ounce at $1,596.70. ' Reuters