Growing European debt crisis pushes stocks lower

Associated Press

Europe’s widening debt crisis and a weak report on Chinese manufacturers pushed stocks sharply lower Wednesday. The Dow Jones industrial average dropped 236 points.

Traders were spooked by the poor results at an auction of German debt, which drew too few bids to sell all of the 10-year notes being offered. Germany has Europe’s strongest economy, and traders have bought its debt as a safe place to store value during turbulent times.

The weak buying suggests that Europe’s crisis might be infecting strong nations that are crucial to keeping the euro currency afloat. Germany bears much of the burden of bailing out weaker neighbors such as Greece and Portugal.

Borrowing costs for Italy and Spain rose from levels that already were considered dangerously high. Europe lacks the resources to bail out those countries, which have its third- and fourth-biggest economies.

The Dow fell 236.17 points, or 2.1 percent, to close at 11,257.55. It has slumped 4.6 percent over the past three days as Congress neared a deadlock on cutting the budget deficit and as Europe’s debt woes appeared to worsen. The Dow has now given back more than half of its big October rally.

It jumped 9.5 percent last month, the biggest gain since 2002.