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Dow Jones Plunges on Oil, Housing Concerns

US share prices dropped sharply Thursday on worries over continuing damage from weakness in the housing sector, where some financial institutions have incurred significant losses. VOA's Barry Wood has more.

The Dow Jones Industrials lost more than 300 points Thursday to close at 13,474. The 2.2 percent loss was the second biggest decline of the year.

Analysts said selling in the New York market was triggered by worries that some brokerage firms may be in trouble from bad securities in the sub-prime mortgage market. Some financial institutions were already in trouble from bad loans to home-buyers unable to make their payments.

Barry Ritholtz, a market analyst in New York, says cheap credit fueled a stock market boom that may be coming to an end. "Two of the key elements driving the markets-stock buybacks (by companies) and LBOs (leverage buyouts from private equity funds) have been enabled by very cheap and easy credit," he said.

The sell off was not limited to the United States. European markets were down sharply and Asian market registered their biggest drop in five months. The dollar weakened significantly against the yen but was steady against the euro. Gold was lower.

In other markets, US bond prices rose as investors sought refuge in government-backed securities, and oil prices traded at over 77 dollars a barrel, very near its record high set one-year ago.