US stocks have tumbled for a second straight day as escalating eurozone debt fears roiled European markets and sharply boosted safe-haven buying of the US dollar and gold.
The Dow Jones Industrial Average skidded 162.79 points (1.51 per cent) to 10,620.16.
The blue-chip index of 30 stocks closed off lows of more than 200 points but still finished with a steeper loss than Thursday's 114-point drop.
The tech-rich Nasdaq composite dropped 47.51 points (1.98 per cent) to 2346.85 while the broad-market Standard & Poor's 500 index shed 21.76 points (1.88 per cent) at 1135.68.
"Exacerbated fears regarding the euro-area debt crisis and the implications on the future of the eurozone and the global economic recovery are stymieing sentiment," analysts at Charles Schwab & Co. said.
Concerns that Greece's debt crisis could spread to other eurozone countries fuelled speculation that the single currency is at risk of collapse. Fears grew that the debt woes in the 16-nation bloc will snuff out its extremely fragile recovery from recession.
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The euro plunged to an 18-month low of $US1.2359, shedding more than 3 per cent in the past week, as scepticism mounted that a joint rescue plan by the European Union and the International Monetary Fund would be capable of containing the crisis.
"Spending cuts highlighted in the eurozone rescue package fuelled fears of economic stagnation throughout the continent, and escalated doubts about the weaker countries' ability to bounce back from jaw-dropping debt," said Andrea Kramer at Schaeffer's Investment Research.
Gold, which has been soaring as a result of the crisis, hit new record highs near $US1250 an ounce.
The European concerns outweighed positive US economic data showing April retail sales rose 0.4 per cent, double market expectations.
US industrial production rose for the second consecutive month in April, up a hefty 0.8 per cent to its highest level since December 2008.
The stronger US dollar weighed on materials and heavyweight energy stocks as the dollar-priced benchmark oil futures contract fell to three-month lows in New York, closing at $US71.61 a barrel.
ExxonMobil, the Dow's largest component, slid 1.76 per cent to $US63.60 and Chevron shed 1.38 per cent at $US77.83.
Financial stocks were pressured after the US Senate approved a measure to allow the Federal Reserve to limit fees on debit card transactions.
American Express dived 5.07 per cent to $US40.64, Visa plunged 9.88 per cent to $US77.26 and Mastercard slid 8.55 per cent to $US212.45.
In the banking sector, Bank of America dropped 3.14 per cent to $US16.34, JPMorgan Chase gave back 2.25 per cent at $US39.89 and Citigroup lost 2.69 per cent at $US3.98.
Computer maker Hewlett-Packard sank 2.65 per cent to $US47.43 after a Credit Suisse analyst downgrade.
Bonds made sharp gains amid the market turmoil. The yield on the 10-year Treasury bond fell to 3.442 per cent from 3.564 per cent on Thursday and that on the 30-year Treasury bond dropped to 4.316 per cent from 4.461 per cent.
Bond prices and yields move in opposite directions.
Dow suffers losses amid Greek riotsDebt crisis fuels clash of cultures in Europe
