Global stocks slide on U.S. bailout doubts

NEW YORK (Reuters) - A chorus of concern about the cost andlack of details about the U.S. government's $700 billion (378billion pound) bailout of troubled banks dragged down globalstocks, government debt and the dollar on Monday and drove upthe price of gold.

U.S. gold futures jumped nearly 4 percent on safe-havenbuying as analyst after analyst worried about the final shapeof the bailout plan, with U.S. lawmakers calling for changesfrom the Treasury Department's proposal.

Euro zone government bonds hit a six-week low, extendinglosses from late last week, and U.S. Treasuries also fell asinvestors fretted the plan would require more U.S. governmentdebt issuance, boosting the yield on longer-dated debt.

Crude oil rose more than $3 a barrel as investors andtraders in the oil market took a different view of the bailoutplan, driving optimism it will stabilize the U.S. economy.

Uncertainty about the bailout plan drove down the shares ofleading European companies and Wall Street more than 2 percent,and analysts said they could not gauge the ultimate cost andform of the plan.

"It's just too big to analyze on a one-day view," said JohnHaynes, strategist at Rensburg Sheppards. "The Fed, I think, isgoing to win in the end, but as to whether stocks go up or downin the next three months, it's the toss of a coin."

While investors hoped the plan will resolve a year-longcredit crisis that has begun to be felt on Main Street, itssize and cost sparked widespread concerns.

"There is too much unknown," said Peter Mueller, interestrate strategist at Commerzbank. "The big question is what willbe the price?"

As has been the case whenever investors have worried aboutthe impact of the credit crisis, banks were the big losers onboth sides of the Atlantic. Five major U.S. banks were thebiggest drag on the benchmark S&P 500, led by shares ofJPMorgan Chase, which fell almost 10 percent.

Before 1 p.m., the Dow Jones industrial average was down185.81 points, or 1.63 percent, at 11,202.63. The Standard &Poor's 500 Index was down 23.99 points, or 1.91 percent, at1,231.09. The Nasdaq Composite Index was down 45.14 points, or1.99 percent, at 2,228.76.

HSBC, Europe's biggest bank, fell 5.8 percent and was thebiggest drop on the pan-European FTSEurofirst 300 index of topEuropean shares.

Shares in Holcim, the world's second largest cement maker,were among the top losers in Europe, falling 18 percent afterRussian cement maker Eurocement took a 6.5 percent stake.Eurocement said it did not intend to bid for the Swiss group.

The U.S. dollar hit fresh three-week lows against the euro,weighed down by concerns about the budgetary impact of the U.S.bailout plan.

The euro rose as high as $1.4660 versus the dollar, thehighest since September 1, according to Reuters Dealing.

"Nobody knows what form the bailout package will take,"said Ron Simpson, director of currency research at ActionEconomics in Tampa, Florida.

"We only know vaguely how much it will cost. So if you area foreigner and looking at the U.S. fiscal position it does notlook pretty for this year and next."

The euro rose 1.82 percent at $1.4727.

The dollar fell against major currencies, with the U.S.Dollar Index off 1.31 percent at 76.559. Against the yen, thedollar fell 1.11 percent at 106.23.

The benchmark 10-year U.S. Treasury note fell 21/32 toyield 3.90 percent. The 30-year U.S. Treasury shed 44/32 toyield 4.47 percent.

U.S. light sweet crude oil rose $5.91 to $110.46 a barrel.

"The key driver continues to be the U.S. rescue packagewhich has changed the sentiment in the oil market," said Bankof Ireland analyst Paul Harris.

"Oil had fallen back below $100 a barrel last week ondemand worries, but the package has gone some way to easingthose concerns. However, I don't think there is enough clarityyet to see prices go significantly higher."

News that China increased crude imports by 11.54 percent inAugust over a year earlier also supported oil prices. Andindustry sources on Monday said that top oil exporter SaudiArabia has trimmed oil supplies to international major and U.S.refiners since the start of September.

Spot gold prices rose $27.45 to $898.60.

Asian stocks climbed overnight. Japan's Nikkei shareaverage closed up 1.4 percent, after hitting a three-year lowlast week.

Outside of Japan, stocks in the Asia-Pacific region were up2.4 percent, bouncing further from a two-year low plumbed onThursday, according to an MSCI index.

(Reporting by Kristina Cooke, Richard Leong, GertrudeChavez-Dreyfuss and Nick Olivari in New York, and Joe Brock,Jan Harvey and Sitaraman Shankar London; Writing by HerbertLash, Editing by Leslie Adler)