-- Stocks fell Monday on worries that Greece could be edging closer to defaulting on its debt. The yield on 10-year Treasury notes reached another record low as investors sought safety in U.S. government debt.
The Dow Jones industrial average had been down as many as 135 points shortly after the opening bell. It recovered briefly, then headed lower again.
Worries over Europe's debt crisis drove traders into Treasuries, pushing the yield on the 10-year Treasury note to 1.87%, lowest since the Federal Reserve Bank of St. Louis began keeping daily records in 1962. During the financial crisis in late 2008, the 10-year yield hit a low of 2.05%.
European bank shares fell sharply over worries about their exposure to Greek government debt. Traders fear that Greece could default on its debts, and European policymakers are divided over how to handle the crisis. Investors are also worried that ratings agencies may downgrade the credit ratings of French banks, which could bring more instability to Europe's beleaguered financial system.
The resignation of a key European Central Bank official Friday combined with worries over a new recession in the United States led to a large stock market sell-off. The Dow industrials and Standard & Poor's 500 index have fallen for six of the past seven weeks.
A default by Greece or one of the continent's other heavily indebted governments could ripple through the global markets and make it more difficult for other European countries to borrow money. Economists worry that Europe's financial crisis could tip a weakening U.S. economy into another recession.
McGraw-Hill stock rose 1.2% in afternoon trading. The company said it will split into two public companies, with one unit focused on education services and the other centered on markets, including the rating agency Standard & Poor's and J.D. Power and Associates.
NetLogic Microsystems jumped 50% after Broadcom said it has agreed to acquire the maker of semiconductors for $3.7 billion. Bank of America rose 1.5% after its CEO, Brian Moynihan, announced new cost-cutting goals.
Wynn Resorts rose initially after a unit of the casino operator said it had a signed a deal to build a resort in Macau. Casinos have been expanding their operations in the former Portuguese colony, considered the world's most lucrative gambling market.
In Europe, Germany's DAX was 1.9% lower at 5,091 while the CAC-40 in France fell 3.2% to 2,881. The FTSE 100 index of leading British shares was down 1.2% at 5,140.
In the febrile market environment, the euro oscillated wildly. After falling to $1.3495, its lowest level since mid-February, it has rallied to trade 0.4% higher on the day at $1.3666.
Selling dominated the Asian trading session, where the Nikkei 225 stock average in Tokyo closed 2.3% lower at 8,535.67 — its lowest closing level since April 2009. Japan's powerhouse export sector was hit hard by the ongoing strength of the Japanese currency, which makes products more expensive overseas.
The weekend resignation of Japan's new trade minister after just eight days in office also unnerved the Tokyo market.
The exceptionally brief tenure of Yoshio Hachiro undermined confidence in Prime Minister Yoshiko Noda, who is tasked with reviving the economy and speeding up Japan's recovery from the March 11 earthquake, tsunami and nuclear crisis.
In Hong Kong, meanwhile, the benchmark Hang Seng index shed 4.2% to 19,030.54 while Australia's S&P/ASX 200 plunged 3.7% to 4,038.50. Mainland China shares were closed for a national holiday.
Oil prices were under pressure alongside faltering stock markets — benchmark oil for October delivery was down 34 cents to $86.90 in electronic trading on the New York Mercantile Exchange.
Tomoko A. Hosaka in Tokyo contributed to this report.