By MATTHEW CRAFT AP Business Writer
Publication: The Day
New York - Europe's latest efforts to quell its financial crisis left investors exasperated Monday, causing steep losses in stock markets on both sides of the Atlantic.
In Europe, Spain formally asked for help to rescue the country's ailing banks, but its request left many questions unanswered, including how much it needs of the $125 billion loan package offered by other European governments. The uncertainty unsettled markets, pushing borrowing costs higher for Spain's government. Spain's stock market plunged 3.7 percent.
The Dow Jones industrial average dropped 138 points to close at 12,502.66, a loss of 1.1 percent. The broader Standard & Poor's 500 index fell even more, 1.6 percent.
Big bank stocks slumped. Many analysts expect banks in Europe and the U.S. to suffer from a freeze-up in Europe's financial system if Spain fails to rescue its troubled banks. Spain's banks have been hobbled by loans made during a real-estate bubble, and the government has been inconsistent about how much help it will need to save them.
Bank of America dropped 4 percent, the biggest fall among the 30 stocks in the Dow Jones industrial average. BofA's stock lost 34 cents to $7.60. JPMorgan Chase fell 67 cents to $35.32 and Citigroup dropped $1.24 to $26.75.
Analysts worry that Europe's piecemeal approach to its government debt crises may fall short, and the banking system of a large country like Spain could collapse.
"It's the same headline risk that we've been dealing with for God knows how long," said Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management in Pennsylvania. "Everybody wants something to happen sooner or later, and nothing's happening."
The leaders of the 27 countries in the European Union meet Thursday and Friday in Brussels for another summit aimed at reining in the crisis, but market players remain skeptical that Germany will sign off on efforts to quell the crisis. As the region's largest and strongest economy, Germany has to participate for any plan to work.
The dollar and Treasury prices rose as investors shifted money into low-risk investments. The yield on the 10-year Treasury note fell to 1.61 percent from 1.67 percent late Friday.