MATTHEW CRAFT,AP Business Writer
NEW YORK (AP) — Europe's latest efforts to quell its financial crisis left investors exasperated Monday, causing steep losses in stock markets on both sides of the Atlantic.The Dow Jones industrial average dropped 138 points to close at 12,502.66, a loss of 1.1 percent. The broader Standard & Poor's 500 index fell even more, 1.6 percent.
In Europe, Spain formally asked for help to rescue the country's ailing banks, but its request left many questions unanswered, including how much it needs of the $125 billion loan package offered by other European governments. The uncertainty unsettled markets, pushing borrowing costs higher for Spain's government. Spain's stock market plunged 3.7 percent.
"Right now it's all about Europe, and confidence is pretty low," said Doug Cote, chief market strategist for ING Investment Management. "The policies that they proposing are too little too late."
Big bank stocks slumped. If Spain fails to rescue its banks, many analysts worry that Europe's financial system could freeze up, and banks across Europe and the U.S. would suffer. Spain's banks have been hobbled by loans made during a real-estate bubble, and the government has been inconsistent about how much help it will need to save them.
Bank of America dropped 4 percent, the biggest fall among the 30 stocks in the Dow Jones industrial average. BofA's stock lost 34 cents to $7.60. JPMorgan Chase fell 67 cents to $35.32 and Citigroup dropped $1.24 to $26.75.
Analysts worry that Europe's piecemeal approach to its spreading government debt crises may fall short, and the banking system of a large country like Spain could collapse. That could shock tightly connected global financial markets.
"It's the same headline risk that we've been dealing with for God knows how long," said Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management in Pennsylvania. "Everybody wants something to happen sooner or later, and nothing's happening."
The leaders of the 27 countries in the European Union meet Thursday and Friday in Brussels for another summit aimed at reining in the crisis, but market players remain skeptical that Germany will sign off. As the region's largest and strongest economy, Germany has to participate for any plan to work.
"What the market wants is action," Cote said. He said investors wanted to see steps toward binding the weak and stronger economies closer together.
The dollar and Treasury prices rose as investors shifted money into low-risk investments. The yield on the 10-year Treasury note fell to 1.61 percent from 1.67 percent late Friday.
In other trading, the S&P 500 index fell 21.30 points to 1,313.72. All 10 of the index's industry groups fell. The Nasdaq composite lost 56.26 points, or 1.9 percent, to 2,836.16.
Energy stocks were also big losers after the price of crude oil fell again. Benchmark U.S. crude lost 55 cents a barrel to $79.21, continuing a slump that has brought the price down from $110 in late February. Exxon Mobil fell 87 cents to $81.24.
Energy prices have been falling as traders anticipate that slower growth in China and the crisis in Europe will drag down global economic growth and decrease demand for energy.
European markets closed sharply lower. Stocks dropped 4 percent in Italy and 2 percent in both France and Germany. Shares of European banks, including Spain's Banco Santander SA and Deutsche Bank AG, sank.
Borrowing costs rose for Spain and Italy, a sign of skepticism that those countries will be able to pay their debts. The yield on Spain's 10-year government bond rose 0.16 percentage point to 6.58 percent. Last week the yield hit 7.18 percent, the highest since the country started using the euro.
Among other stocks making big moves Monday:
— Teva Pharmaceutical Industries gained 4 percent after the drugmaker said a federal court reaffirmed patents protecting its multiple sclerosis treatment Copaxone. The stock jumped $1.71 to $39.72.
— Chesapeake Energy dropped 8 percent. Reuters reported that the company colluded with a Canadian rival to suppress land prices in areas that were considered rich in oil and natural gas. The stock lost $1.58 to $17.03.
— Pfizer and Bristol-Myers Squibb both sank after federal regulators delayed approving their highly touted blood-thinning drug, Eliquis. Bristol-Myers's stock dropped 3 percent, or $1.23, to $34.13. Pfizer's fell 1 percent, or 26 cents, to $22.47.
AP Business Writers Bernard Condon and Christina Rexrode contributed to this story.
Copyright 2012 The Associated Press.