Stocks, Italian Bonds Drop on Europe Debt Concern; Dollar Rises

Stocks fell, Italian bonds dropped for an 11th day and the cost of government and bank default insurance rose to records on concern Europe’s debt crisis will worsen. The euro weakened, while the dollar and gold gained.

The MSCI All-Country World Index sank 2 percent at 4:31 p.m. in New York. Banks led the Stoxx Europe 600 Index down 4.1 percent in the biggest two-day slump since March 2009. Italy’s 10-year bond yield rose 27 basis points in the longest sequence of gains since the euro’s debut in 1999. The German bund yield fell to a record low of 1.84 percent. Rates on two-year Greek debt exceeded 50 percent for the first time. Gold futures jumped 1.4 percent. Standard & Poor’s 500 Index futures lost 2.3 percent at 6:24 p.m.