6:30PM New York, 12:30AM Frankfurt, 8:30AM Sydney[R]– The U.S. benchmark indexes plunge between 4% and 5% as nervous investors increasingly are afraid to take additional risk. Gold and silver jumped with falling confidence in central bankers around the world.[/R]

Global Markets

The U.S. Treasury and the Fed acted swiftly after an emergency meeting last night and offered $85 billion of loan to the teetering insurance company AIG. Once the largest global insurance company with operations in more than 100 countries, AIG is facing near collapse without the emergency cash of $75 billion. The government action will prevent run in the money market funds deposits and allow the insurer to carry out orderly sale of assets and raise long term capital.

Banks, brokerage houses, insurance companies and credit card processors fell sharply after the U.S. bailout of AIG failed to improve liquidity in the interbank loan markets. Dow, Nasdaq, Russell 200 and S&P 500 plunged as much as 5%. Banks plunged more than 8% and Goldman Sachs and Morgan Stanley declined more than 20%. Crude oil fell but gold surged as investors lose their confidence in central bankers. Gold surged 11% and silver soared 15%.

Financial and mining stocks in UK plunged as world markets decline for third day this week. The ongoing widening U.S. financial crisis has unnerved major European and Asian investors. The U.S. financial system weakness has spread from brokers to banks to insurance companies. The BoE along with other central bankers took measures to improve liquidity, but measures fell short of calming investors. UK unemployment rate rose in three months to September.

Stocks in Mumbai, India declined 1.9% as financial stocks in the region declined in the wake of broadening U.S. financial crisis. ICICI Bank dropped 4.8% after it disclosed $25 million exposure to Lehman Brothers, the bankrupt investment banker. Sterlite Industries fell 8.9% to 435.25 rupees and Reliance Industries declined 3% to 1,864.70 rupees. Rupee traded to 9-year low as it reached near 47 to a dollar.

North American Markets

Dow Jones Industrial Average decreased 449.36 or 4.06% to a close of 10,609.66, S&P 500 Index closed down 57.21 or 4.71% to 1,156.39, and Nasdaq Composite Index decreased 109.05 or 4.94% to close at 2,098.85. In Toronto TSX Composite closed down 349.30 or 2.86% to 11,877.69.

Homebuilders fell after the housing starts dropped 6.2% to a nearly two-decade low. Crude oil surged after the release of weekly inventories data.

Of the 30 stocks in Dow Jones Industrial Average all declined.

AIG led decliners in Dow Jones Industrial Average with a fall of 45.33% followed by losses in JP Morgan Chase of 12.20%, in Citigroup of 10.92%, in American Express of 8.4% and in General Motors of 8.4%.

Of the stocks in S&P 500 index, 21 increased, 478 declined and none was unchanged. Of the index stocks, 5 rose more than 3% and 365 fell more than 3%.

SanDisk Corp led the gainers in the S&P 500 index with a rise of 39.10% followed by gains in Newmont Mining of 9.4%, in Monster Worldwide of 6.6%, in Range Resources 4.9%, in Nvidia Corp of 4.3% and in Baker Hughes of 2.3%.

Samsung Electronics the maker of memory cards launched a hostile tender offer at $26 a share for SanDisk. The hostile offer values the company at $5.9 billion. The company rejected the offer and said that it undervalues the company.

AIG led decliners in the S&P 500 index with a plunge of 45.33% followed by losses in Genworth Financial of 25.8%, in Morgan Stanley of 21.75%, in Wachovia Corp of 20.76%, in Constellation Energy of 19.47%, in Dynegy Inc of 18.8% and in Sovereign Bancorp of 16.9%.

Morgan Stanley (MS: chart) appears to be in discussion with several banks to discuss potential merger. After the close New York Times reported that Morgan Stanley and Wachovia discussing a possible merger deal. Morgan Stanley stock has declined more than 40% in the last five days of trading and if the stock continues to decline the investment banker may not have much time to find another merger partner.

Goldman Sachs is the other large independent banker that may be forced to look for a merger partner if the stock continues to fall. Goldman stock dropped 20% in today’s trading.

South American Markets Indexes

Brazil led decliners in the region with a fall of 6.74% followed by decreases in Argentina of 5.08%, in Mexico of 4.72%, in Peru of 3.6%, in Chile of 2.6% and in Colombia of 2.02%.

Europe Markets Review

In London FTSE 100 Index closed lower 178.60 or 3.43% to 5,025.60, in Paris CAC 40 Index decreased 81.57 or 1.96% to close at 4,087.40 and in Frankfurt DAX index lower 98.99 or 1.63% to close at 5,965.17. In Zurich trading SMI decreased 206.18 or 2.97% to close at 6,732.93.