NEW YORK — Fear over European debt surged Monday and drove stocks sharply lower around the world. The Dow Jones industrial average plunged more than 220 points in early trading.
The price of crude oil dropped more than $3.50 per barrel to below $90, and yields for U.S. government bonds sank to record lows, a sign that traders were seeking the safety of American debt. The euro hit a two-year low against the U.S. dollar.
Borrowing costs rose sharply for Spain and Italy, a signal of renewed investor worries that the Spanish government will need an international bailout.
Spain’s market regulator said it was temporarily banning short-selling of shares on its stock indexes. In a short sale, an investor seeks a profit by betting that the price of a certain stock will fall.
Strong selling rattled European markets. The main stock index dropped more than 7 percent in Greece, 3 percent in Spain and Germany, and 2 percent in France and Britain. Asian stocks were also sharply lower.
In the United States, the Dow was down as much as 225 points. At 8:40 a.m. Central time, it was off 215 points at 12,605. The Dow has had only four declines of 200 points this year, including its worst, a 274-point drop June 1.
The Standard & Poor’s 500 index fell 21 points to 1,340, and the Nasdaq composite index plunged 66 points to 2,859.
Bank stocks, which tend to take a hit when fear flares in Europe, were among the biggest losers. Citigroup stock dropped more than 2 percent and Bank of America 1.6 percent.