* Wall Street sharply lower amid fear after Lehman filing
* Short-term bond prices soar on flight-to-safety bid
* Oil prices dip to $95 a barrel as investors flee risk
* Dollar and yen rise amid risk aversion
(Recasts with U.S. markets opening, adds byline; changes
dateline; previous LONDON)
By Herbert Lash
NEW YORK, Sept 15 (Reuters) - Global stocks and crude oil
prices fell sharply on Monday after Lehman Brothers Holdings
Inc's filing for bankruptcy protection made investors flee
risky assets and flock to the safety of government debt.
Shares of financial services companies plunged when U.S.
equity markets opened amid widespread concerns about the
outlook for the economy and corporate profits. Such worries
also led to perceptions that energy demand would slow further,
bringing down oil prices.
Deep fears about the unfolding U.S. banking crisis drove up
demand for U.S. Treasury bills and pushed down yields, which
move in the opposite direction to prices, on an intense
flight-to-safety bid into ultra-short-term government paper.
The 1-month Treasury bill yield <US1MT=RR> fell to about
0.57 percent, its lowest level since April, from about 1.34
percent late on Friday.
"We are seeing cash temporarily moving into the U.S. dollar
amid heightened uncertainty and market turmoil, despite the
fact that much of the turmoil is centered here in the U.S.
financial markets," said Michael Woolfolk, senior currency
strategist at Bank of New York Mellon in New York.
Before 10 a.m, the Dow Jones industrial average <> was
down 307.44 points, or 2.69 percent, at 11,114.55. The Standard
& Poor's 500 Index <.SPX> was down 32.75 points, or 2.62
percent, at 1,218.95. The Nasdaq Composite Index <> was
down 44.17 points, or 1.95 percent, at 2,217.10.
The yen rallied broadly, and the U.S. dollar rose as
mounting risk aversion after Lehman Brothers' <LEH.N> filing
attracted safe-haven flows.
The U.S. dollar index <.DXY>, which measures the dollar's
performance against a basket of currencies, was up 0.72 percent
at 78.917. Against the yen, the dollar <JPY=> was down 2.07
percent at 105.69.
The euro <EUR=> was down 0.27 percent at $1.4189.
Oil plunged as much as $7 per barrel as investors sought
safer havens and on early signs that Hurricane Ike had spared
key U.S. energy infrastructure along the Gulf of Mexico.
U.S. light sweet crude oil <CLc1> fell $4.97 to $96.21 a
barrel.
Gold was higher on safe haven buying, but bullion prices
retreated from highs after oil prices fell. Platinum and
palladium also slipped sharply as investors worried about the
outlook for economic growth.
Spot gold prices <XAU=> rose $11.55 to $775.00 an ounce.
In the U.S. government debt market, the benchmark 10-year
Treasury note <US10YT=RR> rose 48/32 to yield at 3.53 percent.
The 30-year U.S. Treasury bond <US30YT=RR> rose 58/32 to yield
4.23 percent.
European stocks fell more than 4 percent, following
tumbling equity markets in Asia. Stock indices in Australia,
Singapore and Taiwan all dropped 3 percent to 4 percent, while
Indian stocks <> fell 5 percent.
The FTSEurofirst 300 <> index of top European shares
was down 4.4 percent at 1,111.51 points.
Lehman, weighed by losses spawned by the U.S. mortgage
crisis, sought bankruptcy protection on Monday following a
failed last-minute scramble to find a buyer over the weekend.
Adding to investor worries was a report that American
International Group Inc <AIG.N>, one of the world's largest
insurers, had asked the Federal Reserve for a $40 billion
bridge loan.
AIG shares fell almost 50 percent in volatile trade, off
about $5.50 a share at $6.80 soon after trading opened on Wall
Street.
(Additional reporting by John Parry, Steven C. Johnson and
Lucia Mutikani in New York and Veronica Brown and Ian Chua in
London, Editing by Chizu Nomiyama)
