Europe debt fears, US woes rattle global markets

Stock markets in the United States and across much of Europe and Asia tumbled on Tuesday, amid fears of the eurozone's debt crisis and a possible US slowdown, but later enjoyed a modest rebound.On Wall Street, the Dow Jones Industrial Average sank 100.96 points (0.90 percent) to close at 11,139.30, its third straight trading day with triple-digit losses. The broader S&P 500 fell 8.73 points (0.74 percent) to 1,165.24, while the Nasdaq Composite, buoyed by surprising strength in the tech sector, slipped only 6.50 points (0.26 percent) to 2,473.83.US stocks had plunged more than two percent in the first minutes of trade, after markets reopened from a long holiday weekend.Investors were unsettled by anti-austerity protests in Italy and Spain and concerned by signs that Greece might fail to meet debt-cutting goals and that Germany may drop support for the latest Greece bailout plan. "Eurozone anxiety continues to reign," analysts at Charles Schwab said in a research note. Adding to the concerns, Switzerland's central bank said it would fight to keep the Swiss franc from rising past 1.20 francs against the euro, sending safe-haven flows surging to the dollar. European stocks were mixed. London climbed 1.06 percent in a modest rebound from Monday's brutal sell-off, but Paris dropped 1.13 percent while Frankfurt fell 1.0 percent. In Asia, Tokyo plummeted 2.21 percent to hit its lowest level since April 2009, while Seoul shed 1.07 percent and Sydney tumbled 1.60 percent. The global jitters sent investors briefly flocking to gold and US government debt, both traditional safe-haven assets.Gold hit a record high price above $1,921 an ounce on the London Bullion Market, but then slumped to finish the day at $1,895. The yield on the 10-year US Treasury note fell to a historic low of 1.929 percent before bouncing back. Bond yields and prices move in opposite directions. The turnaround was boosted by positive data on the US service sector, which grew more than expected in August, according to a monthly survey by the Institute for Supply Management. The ISM index of non-manufacturing activity rose to 53.3 percent last month, up from 52.7 percent in July. Any level above 50 indicates growth. "Stocks received temporary relief from the August ISM Service Index," analysts at Briefing.com said in a research note.Investors hunting for bargains also helped the stock market pare its early losses, with gains by technology companies like Amazon (up 2.9 percent), Netflix (up 2.7 percent) and Apple (up 1.5 percent). "The tech sector has been leading the market on its rally from the morning’s lows. It lent a bottom-fishing mentality," said Michael James, managing director at Wedbush Morgan Securities.Bank stocks ended the day with sharp losses, however, with Bank of America down 3.6 percent, Citigroup off 2.5 percent and JPMorgan Chase down 3.4 percent. Financial stocks have been pummeled by fears of contagion from Europe's debt crisis, as well as concerns about the mounting cost of litigation stemming from the subprime-mortgage debacle.US authorities unveiled lawsuits against more than a dozen US and foreign banks late on Friday, alleging that the banks' faulty mortgage-backed securities cost taxpayers tens of billions of dollars.On the forex market, the Swiss central bank's intervention vow boosted the dollar against other currencies, as safe-haven flows diverted away from the Swiss franc in favor of the greenback. The dollar strengthened to $1.3992 against the euro late on Tuesday, from $1.4098 a day earlier.The dollar rose to 77.68 Japanese yen from 76.89 on Monday; to 0.8618 Swiss francs from 0.7872; and to $1.5945 against the British pound, from Monday's rate of $1.6118. US bond prices, after flirting with record territory, pared their gains but still ended up higher than last week's levels. The yield on the 10-year Treasury note dropped to 1.98 percent from 2.00 percent late Friday, while that on the 30-year bond dropped to 3.24 percent from 3.31 percent.