New Japan fears shake financial markets

Deepening fears about the crippled nuclear plants in Japan shook financial markets Wednesday.

Stocks opened lower then dropped sharply around noon Wednesday after the European Union's energy chief was quoted as saying that Japan's nuclear crisis could get worse. Treasury prices jumped, sending yields to their lowest levels this year as investors piled into investments seen as being more stable.

The Dow Jones industrial average fell 242, or 2 percent, to 11,613.

The Standard & Poor's 500 index fell 24.99, or 1.95 percent, to 1,256. All 10 company groups in the S&P 500 fell. The index has dropped 3.5 percent this week and has now given up all its gains for the year.

The CBOE Market Volatility Index jumped 18 percent, a sign that investors expect more volatility in the stock market.

Japan temporarily suspended work at a stricken nuclear plant after a surge in radiation made it too dangerous for workers to remain there. That came a day after Japan's prime minister said four crippled reactors at a nuclear power plant were leaking dangerous amounts of radiation.

The Nasdaq composite index fell 50.51, or 1.89 percent, to 2,616.

The yield on the 10-year Treasury note fell as low as 3.15 percent, the lowest level this year. In midafternoon trading the yield was 3.17 percent.

The dollar dropped to its lowest point in almost 16 years against the Japanese yen, briefly falling under 80 yen. The dollar is now close to its lowest point of the post-World War II era: 79.75 yen reached in April 1995.

A stronger yen hurts Japan's exporters, potentially dealing another blow to the economy already racked by an earthquake, tsunami and evolving nuclear crisis.

Japan's economy, the third-largest in the world after the United States and China, accounts for about 10 percent of U.S. exports.