Investors seeking security flee to Treasuries as stocks sink

— -- With stocks getting dangerously close to their bear-market lows Tuesday, investors too frayed to handle yet another gut check are running for cover.

Hoping to sidestep more pain in stocks, investors bought Treasuries with enough intensity to knock the yield on the 10-year Treasury, which moves opposite of its price, down to 2.65% from 2.90%. That is its lowest yield since January.

Rising concern over the weekend about slowing global economic growth, plus signs of strain at European banks, put fear into high gear.

The fact investors are willing to accept such low yields on U.S. debt shows how the trepidation about holding stocks is overwhelming any longer-term worries about the government's mounting debt to stimulate the economy, says Josh Stiles of bond trading firm IDEAglobal.

And investors worried about both declining stock value and the government's increasing borrowing played it even safer. The price of an ounce of gold rose $25.50 to $967.00.

"The bottom line is, investors have given up (on stocks)," says Tom di Galoma of investment bank Jefferies. Signs of the return of fear included:

•Weakening confidence in the strength of financials. The price of insurance to protect investors against default by U.S. financial firms soared 9.5% to levels not seen since last November, according to Credit Derivatives Research's CDR Counterparty Risk Index. The price of the insurance "is bumping up against levels showing financial risk is getting scary again," says Credit Derivatives Research's Tim Backshall.

•Increasing jitters about the health of corporate borrowers. The price of insurance to protect investors against losses resulting from defaults by companies with lower credit ratings rose 1.8% to levels not seen since late last year, according to Credit Derivatives Research.

•Mounting fear about the financial strength of nations. The latest thing investors are fretting about is if nations can withstand the strain to hold together their economies. In just a week, the price to insure investors against default by Russia is up 70%; Germany, 21%; and the U.S., 13.5%.