By Kana Inagaki And Michele Maatouk
Global stock markets skidded as a record drop in U.S. existing-home sales added to concerns about the global economy, pushing investors into bonds and less-risky assets.
The Dow Jones Industrial Average briefly dropped below 10000, the Japanese yen hit a 15-year high against the dollar, oil prices fell below $72 a barrel, and the U.S. Treasury's benchmark 10-year note's yield touched 2.467%, its lowest since March 19, 2009.
The Dow industrials recovered somewhat but still closed down 133.96 points, or 1.3%, at 10040.45. The Standard & Poor's 500-stock index lost 15.49 points, or 1.5%, to 1051.87, and the Nasdaq Composite Index ended down 35.87 points, or 1.7%, at 2123.76.
The Stoxx Europe 600 index closed down 1.7% at 249.44. The U.K.'s FTSE 100 index fell 1.5% to 5155.95, France's CAC-40 index dropped 1.7% to 3491.11, and Germany's DAX shed 1.3% to 5935.44.
Construction and materials shares were the hardest hit in Europe, after Irish building-materials company CRH /zigman2/quotes/202550827/composite CRH +0.40% issued a profit warning as it posted worse-than-expected first-half results. Traders said the profit warning intensified doubts about the recovery in the world's largest economy, after the company pointed to an unexpected slowdown in the U.S. market, to which it has significant exposure.
The news sent CRH shares nearly 17% lower and had a knock-on effect on the rest of the sector. Wolseley shares fell 5.1%, Saint-Gobain lost nearly 4.7%, and the Stoxx Europe 600 index for construction closed down 4.2%.
CRH's fall also hit Dublin, where the ISEQ fell 5.6%.
European stock declines worsened late in the session, as data showed U.S. existing-home sales for July plunged 27.2%, to their lowest level in 15 years. The fall was nearly twice what analysts had expected.
Richard Batty , investment director at Standard Life Investments, said European markets have been very sensitive to weakness in U.S. housing and employment data in recent months amid uncertainty about the sustainability of the recovery. The data coming out of the U.S. has generally been weak since stimulus packages in housing and the auto industry came to an end, he said.
Earlier in Tuesday's trading day, investors largely shrugged off the release of better-than-expected euro-zone industrial new-orders data, which showed factory orders rose 2.5% in June from May, versus expectations of a 1.5% increase.
Late in New York, the euro was at $1.2679, from $1.2663 late Monday, and sterling was at $1.5431 from $1.5516. The dollar was at 84.20 yen from 85.22 yen, after hitting 83.58 yen, its lowest level since 1995, following the housing data. The dollar was at 1.0303 Swiss francs, from 1.0412 francs.
Light, sweet crude for October delivery settled down $1.47 at $71.63 a barrel on the New York Mercantile Exchange. Gold for August delivery added 0.4% at $1,231.80 a troy ounce on the Comex division of Nymex.
The stronger yen, combined with growing market exasperation over Japan's failure to tackle its economic issues, sent the Nikkei Stock Average to a 15-month low below 9000 and into bear-market territory.
With currency-sensitive exporters in the lead, the Nikkei fell 1.3% to 8995.14, culminating a 21% tumble from its peak of 11339.30 on April 5.
The index is now at its lowest level since May 2009, when the market was struggling out of the 2008 global financial crisis.
The ever-stronger yen was seen as the main culprit in the selloff, since it badly undercuts the profitability of bedrock corporates such as Sony /zigman2/quotes/208567357/composite SNE -2.14% , which dropped 3.7%, and Nikon /zigman2/quotes/203281219/delayed JP:7731 +1.28% , which skidded 4%.