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Spread of Greek debt crisis hits world markets

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Henny Ray Abrams/AP

(Read caption) Specialist Arthur Andrews of Banc of America works on the floor of the New York Stock Exchange Thursday during one of the most turbulent days for the Dow Jones Industrial Average, which dropped almost 1,000 points in less than half an hour. The scare, which may have been caused by an errant trade, came during a jittery day for world markets as investors fled risks brought on by the Greek debt crisis.

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Debt is not just a Greek problem anymore.

The fear that the forces behind the Greek debt crisis may also affect other European nations hit global markets in spectacular fashion Thursday.

Stock indexes fell 1.5 percent in London and more than 2 percent in Paris. For a brief moment, the Dow Jones Industrial Average fell nearly 1,000 points before recovering somewhat.

There were reports that the sudden plunge was caused by an errant trade. But that was small comfort to investors. Even after stabilizing, the Dow still finished the day down nearly 350 points, its biggest single-day point drop since the depths of the great recession 15 months ago.

All over the world, there were signs that investors were fleeing the risk of Europe's indebted nations. The euro fell to 14-month lows against the dollar and a whopping 5 percent against the yen.

The volatility index (VIX) of the Chicago Board Options Exchange – a widely watched gauge of market fear – surged 32 percent to close to its highest level in a year.

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