Wall Street reacts to fresh concerns over Greek debt

Dow Jones: 10,655.30 (–258.08) Nasdaq: 2,335.83 (–79.57) SP 500: 1,099.23 (–32.19):US STOCKS tumbled yesterday, sending the Standard and Poor's 500 Index to a one-year low, as concern over the Greek debt crisis and Bank of America's slump offset a rebound in manufacturing and construction spending.

The S&P 500 lost 2.9 per cent in New York, its lowest close since September 8th, 2010.

“The focus will be on Europe until they get their house in order,” Tom Wirth, a senior investment officer for Chemung Canal Trust in Elmira, New York, said.

Global stocks slumped as European officials prepared to meet in Luxembourg to consider how to shield banks from the debt crisis and boost the region’s rescue fund after Greece misses a deficit target for 2012.

Euro region finance chiefs will meet again on October 13th to decide whether the austerity push is enough to win a sixth bailout payment. European governments are close to resolving Finland’s demand for collateral to underpin bailout loans, removing an obstacle to Greece’s second rescue package, people familiar with the discussion said.

Earlier yesterday, stocks rose as a report showed that manufacturing in the US unexpectedly accelerated in September as production picked up, easing concern the world’s largest economy is stalling.

Bank of America declined 9.6 per cent to $5.53. Financial shares are under pressure as European regulators struggle to quell concern that their lenders may be hurt by the sovereign debt crisis.

Citigroup slumped 9.8 per cent to $23.11. The bank may be penalized by regulators in Japan for the third time since 2004 after its Japanese retail banking unit possibly breached rules by failing to fully explain product risk to customers, two people familiar with the situation said.

Alcoa, the largest US aluminum producer, fell 7 per cent to $8.90.

AMR tumbled 33 per cent to $1.98. A Chapter 11 filing “is certainly not our goal or our preference,” said Andy Backover, an American spokesman.

Arch Coal slipped 9.3 per cent to $13.22. The St Louis-based coal miner cut its forecast for 2011 adjusted earnings.

Yahoo! rallied 2.7 per cent to $13.53, after Alibaba chairman Jack Ma expressed interest in buying the Web portal. – (Bloomberg)