* U.S. stock sell-off turns into stampede
* Growing anxiety over widening euro zone debt crisis
* U.S. stocks fall as much as 9 percent in widespread rout
* Euro tumbles broadly as Greek debt concerns escalate
* Bonds rally as contagion fears spur mad rush to safety
(Recasts, adds close of U.S. markets, byline
By Al Yoon and Herbert Lash
NEW YORK, May 6 (Reuters) - U.S. stocks plunged as much as
9 percent on Thursday as a wave of selling triggered by
Europe's debt crisis turned into a stampede, pushing the euro
to an almost 14 month-low and gold close to record highs.
U.S. stock exchange officials were investigating whether
erroneous trades caused a sudden slump in stock prices that
wiped nearly $1 trillion off U.S. equity values at the peak of
the sell-off before prices clawed back some of their losses.
Traders in Asia were shaken from their beds and told to
start trading amid the plunge as investors sought to stem
losses in the rapid sell-off. The rout on Wall Street came
after the close of European stock markets and during the wee
hours of the night in Asia.
Investors drove up the price of government debt in a mad
rush to safety and gold jumped more than 3 percent to top
$1,200 an ounce in the biggest one-day gain in more than a
year.
The scale of the sell-off caught traders by surprise. The
VIX <.VIX>, Wall Street's so-called fear gauge, soared 31.7
percent in its largest percentage jump since September 2008 --
just after the collapse of Lehman Brothers ushered in the
darkest days of the biggest financial crisis since the Great
Depression.
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Speculation about what caused the biggest intraday point
drop ever in the Dow Jones Industrial Average -- a fall of
998.5 points at the day's worst -- was rampant. Multiple
sources cited an alleged misplaced trade caused by a "fat
finger." Citigroup Inc <C.N> said it was investigating the
rumor. [] []
"The rumor, which was the same thing that everyone else had
heard, was that there was a multi-billion order that was
erroneously sent into the stock market," said Steve Leuer, a
stock index futures trader in Chicago.
Fears of a looming new credit crunch drove the rout on
worries that the debt crisis in Europe was escalating. But some
said speculative bubbles had built in the equity, metals and
energy markets and were the real catalyst behind the sell-off.
"The stock markets have retraced more than 80 percent from
their lows, copper has nearly tripled and crude oil is up
nearly 250 percent," said Troy Buckner, managing principal of
hedge fund NuWave Investment Management LLC of Morristown, New
Jersey. "Multiple sectors were exposed to these excesses."
The sell-off was broad and deep, with all 10 of the S&P 500
sectors falling 2 to 4 percent. The financial sector was the
worst hit, sliding 4.1 percent <.GSPF>.
The Dow Jones industrial average <> dropped 347.80
points, or 3.20 percent, to 10,520.32. The Standard & Poor's
500 Index <.SPX> fell 37.75 points, or 3.24 percent, to
1,128.15. The Nasdaq Composite Index <> lost 82.65 points,
or 3.44 percent, to 2,319.64.
U.S. Treasury prices soared in a safe-haven stampede.
Ten-year notes <US10YT=RR> last traded up 1-7/32 at 102
after hitting a session high of 103. The 10-year yield was last
3.40 percent after trading down to 3.27 percent, a five-month
intraday low.
Investors rushed to the perceived safety of the U.S. dollar
and Japanese yen as the European Central Bank offered no new
measures to ease the Greek debt crisis.
After dropping to $1.2523, the euro was last down 1.5
percent at $1.2622 <EUR=>, its lowest since March 2009.
"This is a full capitulation sell-off we've seen in the
last couple of hours," said Brian Dolan, chief currency
strategist, at Forex.com in Bedminster, New Jersey.
"The sovereign credit worries in Europe started the ball
rolling and now it's a complete panic."
The euro, which hit 110.65 yen earlier -- its lowest level
since 2001 -- was on track for its biggest daily loss against
the yen since October 2008, according to Reuters data.
Among major currencies, the dollar was only weaker against
the yen, dropping more than 4 percent to as low as 88.03 yen
<JPY=>, according to Reuters.
Selling increased as Greek lawmakers approved a 30-billion
euro austerity bill that paved the way for a bailout by the
European Union and International Monetary Fund.
Investors fretted over the effect of the crisis on the more
vulnerable members of the euro zone.
"Many expect that Portugal and maybe Spain will follow in
Greece's footsteps and need a bailout from the European Union,"
said John Doyle, foreign exchange strategist at Tempus
Consulting in Washington.
Little was spared during the sell-off. Emerging markets
were hard hit, but stocks prices in Latin America fell less
than Wall Street for the most part.
The Bovespa index <> in Sao Paulo slid 2.3 percent and
the Brazilian real <BRBY> fell 5 percent at one point in its
biggest one-day plunge since October 2008. The real later pared
some losses.
The MSCI's all-country world stock index <.MIWD00000PUS>
tumbled 2.7 percent.
(Reporting by Herbert Lash; Editing by Leslie Adler)
