NEW YORK- Fear of bank nationalizations and more weak economic data battered global markets yesterday, with stock markets plunging worldwide and investors moving into safe havens, driving up the price of gold to over $1,000 an ounce.
U.S. stocks were saved from closing on their lows for the session when the White House said late in the day that it still backed a privately held banking system, despite concern about the erosion of banks' capital.
But financial markets remain concerned that the global economic slump, sparked in mid-2007 by the falling U.S. housing market, is continuing to take its toll on banks, despite efforts by many governments to shore up their banking systems.
Former Federal Reserve Chairman Paul Volcker, now a top adviser to President Obama, said the global economy may be deteriorating even faster than during the Great Depression.
"There's a little bit of panic out there. Equities are setting new lows and gold is the place to run to," said Robert MacIntosh, chief economist at Eaton Vance in Boston.
Gold futures for April delivery in New York settled up $25.70 at $1,002.20 an ounce.
The White House support for keeping major U.S. banks in private hands came just as the S&P 500 index, a broad measure of the U.S. equity market, was poised to break the 11-year lows seen in November.
Also, CNBC television reported that the U.S. Treasury will provide some details on the Obama Administration's bank rescue plan next week, helping financial shares cut losses.
Citigroup Inc. trimmed a sharp decline, but still closed down 22 percent at $1.95 a share, the first time it has closed under $2 since January, 1991.
The Dow Jones Industrial Average closed down 100.28 points, or 1.34 percent, at 7,365.67. The Standard & Poor's 500 Index shed 8.89 points, or 1.14 percent, at 770.05. The Nasdaq Composite Index fell 1.59 points, or 0.11 percent, at 1,441.23.
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