CLOSING MARKET REPORT
Bank fears, AIG fallout fuel Wall Street sell-off

* Spike in inter-bank lending rate fuels worry
* US extends US$85b loan to bail out AIG
* Morgan Stanley, Goldman Sachs tumble
* Dow off 4.1%; S&P down 4.7%, Nasdaq off 4.9%

NEW YORK - US stocks tumbled to a three-year low on Wednesday as the US rescue of insurer AIG failed to calm a crisis of confidence in global markets and banks were scared to lend to each other.

The Dow fell almost 450 points and the Nasdaq fell nearly 5 per cent in its worst day since the aftermath of the Sept 11 attacks in 2001 as rattled investors worried about who could be the next victim of the global credit crisis.

Morgan Stanley shares sank 24.2 per cent to US$21.75 as investors worried whether it would survive as an independent investment bank in the current environment.

Shares of the other remaining major US investment bank, Goldman Sachs, dropped 13.9 per cent to US$114.50 and at one point fell below US$100 for the first time in more than three years.

The Dow Jones industrial average fell 449.36 points, or 4.06 per cent, to 10,609.66, its lowest level since November 2005. It was the blue-chip Dow average's biggest percentage drop since Monday, when it fell 504.48 points, or 4.42 per cent, the most since the aftermath of 9/11.

The S&P 500 fell 57.21 points, or 4.71 per cent, to 1,156.39, its lowest level since May 2005 and its biggest percentage drop since Sept 17, 2001, when the markets reopened after the Sept 11 attacks.

The Nasdaq also fell the most since Sept 17, 2001. It shed 109.05 points, or 4.94 per cent, to 2,098.85, its lowest level since August 2006.

The White House defended government actions to shore up troubled insurance company American International Group (AIG), saying it was to prevent broader harm and said it was 'concerned about other companies'.

Source: Singapore Business Times - 18 Sep 2008