Bloomberg Stocks Slide as Market Rout Triggers Trading-Systems Concern

May 7 (Bloomberg) -- Stocks slid for a fourth day, erasing 2010 gains for U.S. benchmark gauges, and the bonds of debt- laden nations tumbled after Europe’s debt crisis spurred an equity rout yesterday that undermined confidence in trading systems. Oil sank, capping the biggest weekly drop since 2008.

The Standard & Poor’s 500 Index fell as much as 3 percent before paring losses to 1.5 percent at the 4 p.m. New York close, leaving it down 0.4 percent in 2010. The MSCI World Index sank 2.3 percent. The Stoxx Europe 600 Index fell 3.9 percent to the lowest level since November. Greece led a drop in deficit- stricken European nations’ bonds, with the yield premium demanded to own the 10-year securities instead of benchmark German bunds rising to a record 9.65 percentage points.

Regulators are reviewing a plunge that briefly wiped out more than $1 trillion in U.S. equity value yesterday as the Dow Jones Industrial Average slid almost 1,000 points before paring losses. Concern over the integrity of the trading mechanisms that may have exacerbated the drop overshadowed the biggest growth in U.S. jobs in four years. Credit-default swaps on European banks surged to an all-time high and the benchmark gauge of U.S. stock volatility capped a record weekly gain.

Europe Concern

Stocks have been pummeled the last two weeks amid concern European leaders won’t do enough to keep the most indebted nations from defaulting after a 110 billion-euro ($140 billion) rescue package for Greece failed to halt a rise in government borrowing costs.

The Stoxx 600 has tumbled 13 percent from its high for the year last month, while the S&P 500 has lost 8.7 percent from its 19-month high on April 23. The Dow average fell 139.89 points today to 10,380.43, giving it a 0.5 percent retreat for 2010. more...