Markets Swoon Over Anxiety About Europe

NEW YORK — The threat of a financial crisis spreading from Europe shook markets on Wednesday.

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The Dow Jones industrial average was down 60 points to 12,443 in late afternoon.

The Dow was sharply lower for most of the day, then moved higher in late afternoon trading. It was down as many as 191 points at midday. The Dow has lost 6 percent this month, nearly wiping away all of its gains for the year. It has risen only three days in May.

Analysts and investors have turned increasingly skeptical this month that European leaders will prevent Greece from dropping the euro or agree on ways to jump-start the region's economy.

In Brussels, leaders of the 27 countries that make up the European Union met to discuss ways to keep the debt crisis in Europe from getting worse, including proposals to promote jobs and growth. The Organization for Economic Cooperation and Development warned Tuesday that the 17 countries that use the euro risk falling into a "severe recession."

Plenty of good ideas to buttress Europe's financial system have been floated in recent weeks, said Paul Zemsky, global head of asset allocation at ING Investment Management. Eurobonds could be sold by countries in the currency union to raise money for bailouts and banks. Some have proposed insuring bank deposits across countries that use the euro, a program modeled on the U.S. Federal Deposit Insurance Corp.

"There are all these great ideas," Zemsky said. "But there's nothing yet. There's a lot of talk and no follow through."

Benchmark stock indexes dropped 2.3 percent in Germany, 2.6 percent in France and 3.3 percent in Spain.

The euro continued to fall against the dollar, reaching $1.25, the lowest since July 2010.

In other trading, the Standard & Poor's 500 index fell 9 points at 1,307. The Nasdaq composite index dropped 15 points to 2,824.