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World stock markets took a beating Monday over fears that the U.S. economy was heading back into a recession just as the European debt crisis was heating up and the eurozone’s economic indicators were slumping.

Any troubles in the world’s largest economy cast a long shadow over the markets, and a report Friday that the U.S. economy failed to add any new jobs in August caused European and Asian stock markets to sink sharply Monday.

But the news from Europe was also discouraging. Wall Street, which was closed Monday due to the Labor Day holiday, braced for losses Tuesday after the yields in so-called peripheral eurozone countries _ Greece, Italy and Spain _ rose sharply against those of Germany, whose bonds are widely considered a safe haven.

Although retail sales in the 17-nation eurozone rose unexpectedly in July, a survey of the services sector Monday showed a slowdown across the continent for the fifth consecutive month. The purchasing managers’ index for the eurozone showed the services sector was still growing _ unlike the manufacturing sector _ but only barely. That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week.

“There’s so much uncertainty, so much fear, that investors don’t know what to do,” said David Kotok, chairman and chief investment officer at Cumberland Advisors. “I don’t remember the last time stocks were so cheap and nobody wanted them.”

Investors were also shaken by signs that the Italian government’s commitment to its austerity program is wavering. Prime Minister Silvio Berlusconi’s government has backtracked on some deficit-cutting measures, prompting EU officials to urge Italy to stick to its promised plan.

The difference in interest rates between the Greek and benchmark German 10-year bonds, known as the spread, spiraled to new records on Monday, topping 17.3 percentage points. Yields on the Greek bonds were above 18 percent.

Mario Draghi, the incoming chief of the European Central Bank, told a conference in Paris that among the common currency’s problems was a lack of coordinated fiscal policies and that the solution was more integration.

He dismissed the idea of eurobonds _ debt issued jointly by the eurozone countries. Some have argued this would help weaker countries borrow more easily because they wouldn’t have to pay such high interest rates. But stable countries like Germany would likely see their rates rise.

Instead, Draghi suggested the eurozone should adopt rules that would require more budget discipline.

Renewed jitters over the eurozone debt crisis also contributed to the slump in financial stocks amid concerns the banks would need to raise new capital. Deutsche bank closed down 8.9 percent in Frankfurt, while Societe Generale in Paris shed 8.6 percent.

The U.S. unemployment crisis has prompted President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring. Until then, however, traders coming back from the U.S. holiday weekend will have little to hold onto.

The August jobs figure was far below economists’ already tepid expectations for 93,000 new U.S. jobs and renewed concerns that the U.S. recovery is not only slowing but actually unwinding. U.S. hiring figures for June and July were also revised lower, only adding to the gloom flexcheck cash advance.

Many traders have already pulled out of any risky investments _ such as stocks, particularly financial ones, the euro and emerging market currencies _ and pile into safe havens: U.S. Treasuries, the dollar, the Japanese yen and gold.

With Wall Street closed, investors focused their selling in Asia and Europe, where the equity losses Monday were some of the heaviest this year.

“We’ve got some rough riding ahead,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, adding he was “concerned that we could see a second wave of selling when most traders are back at their desks.”

Dow futures were down 1.8 percent at 11,010 points while the broader S&P 500 futures were 2.0 lower at 1,145.70.

After Asian indexes closed lower, with the Japan’s Nikkei 225 shedding 1.9 percent, European shares booked sharp losses. Britain’s FTSE 100 closed the day down 3.6 percent to 5,102.58. Germany’s DAX slumped a massive 5.3 percent to 5,246.18, and France’s CAC-40 tumbled 4.7 percent to 2,999.54.

The health of the U.S. economy is crucial for the wider world because consumer spending there accounts for a fifth of global economic activity. The U.S. imports huge amounts from Japan and China and is closely linked at all levels with the European market. The U.S. has seen a slump in consumer and business sentiments.

Traders were hoping for signs that the Federal Reserve might take action at its September meeting to support the economy _ perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said.

“Right now the possibility has increased,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “I think they have to do something. The markets are expecting QE3.”

Banking stocks were among the hardest hit Monday, partly because the U.S. government on Friday sued 17 financial firms for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued.

In Asia, Australia’s S&P/ASX 200 followed the broaden trend to close down 2.4 percent and South Korea’s Kospi slid 4.4 percent. Hong Kong’s Hang Seng slid 3 percent. Benchmarks in Singapore, Taiwan, New Zealand and the Philippines also were down.

Shanghai’s benchmark Composite Index down 2 percent to 2,478.74, its lowest close in 13 months. The Shenzhen Composite Index lost 2.4 percent.

In currencies, the euro weakened to $1.4100 from $1.4187 in New York late Friday. The dollar was roughly flat at 76.87 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.

Benchmark oil for October delivery was down $2.12 to $84.33 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday.

In London, Brent crude for October delivery was down $1.63 at $110.70 on the ICE Futures exchange.

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Schnucks is exiting the Mid-South region, selling nine of its Memphis, Tenn.-area stores to Kroger and closing three others, the grocery chain announced this afternoon.

“Despite the best efforts of our talented store teams and a strong customer following, we were unable to gain the strong foothold we had hoped for when we entered the market in 2002,” Scott Schnuck, the company’s chief executive, said in a statement. “Schnucks competes very favorably in other markets, but in the Mid-South, fierce competition including a growing number of non-traditional grocers and lingering high price perception was the one-two punch that brought us to today’s announcement.”

The Memphis area was Schnucks’ second-largest market with 12 stores and eight fuel and convenience centers. Schnucks, which is based in Maryland Heights, operates 105 stores in seven states.

The nearly 1,200 Schnucks employees at those stores will be given the chance to interview for positions with Kroger.

Last year, Schnucks closed another store in the Memphis area. At that time, it cited increased competition from other retailers, including some supercenters.

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The housing market’s long-awaited recovery waited another month in July.

Sales of previously owned houses in metro St. Louis fell 18 percent compared to June, and were 9 percent of May’s pace, an unusually steep slip for a normally busy month, one reflecting a mix of tight credit, hot weather and a fresh round of economic worry. Prices fell, too, across most of the region.

The news wasn’t all bad, though, as sales soared 16 percent compared to the same month last year

Wells Fargo plans to test a $3 monthly fee for debit cards starting this fall.

The San Francisco-based bank said the fee will be applied to checking accounts opened in certain states starting in October. The fee would be on top of the monthly service fees that Wells Fargo already charges for checking accounts.

Wells Fargo also announced earlier this year that it will end its debit rewards program.

Banks are experimenting with fees and scaling back perks in response to a new regulation that’s expected to sharply reduce their revenue. Starting this fall, a new cap will limit how much banks can collect from merchants whenever customers swipe their debit cards.

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For three days running, the rallies have been carnival-like affairs with bands, horseback riders and even a camel dyed green. At each gathering, thousands of delirious supporters of Moammar Gadhafi cheered as the brother leader’s defiant speeches boomed from massive speakers.

As NATO hammers away at the Libyan leader’s defenses and the United States and its allies throw their support behind the rebels, Gadhafi is trying to boost morale in what is left of his nation and show his people he is still strong and his opponents are few.

“These are the millions of Libyan people and the picture is now complete. Who else remains? Less than 100,000 are trapped in Benghazi, Derna and Tobruk,” Gadhafi said in one of the speeches, referring to rebel-held cities in the east.

Bolstering that image is all the more pressing after the U.S. and more than 30 nations recognized Gadhafi’s enemies during a meeting Friday in Istanbul, potentially freeing up billions in frozen oil money that could be put into rebel hands.

NATO jets destroyed a military storage facility and other targets in Tripoli’s eastern outskirts early Sunday, and rebel attacks on the eastern oil city of Brega stretched into their fourth day, with reports of pitched battles in the residential areas.

Rebel spokesman Mohammed al-Rajaly said his forces had liberated the northeastern half of the city and were moving against government forces hold up in the southwestern part.

The latest pro-Gadhafi rally was held Saturday in the shattered city of Zawiya, where outgunned rebels held off government forces for weeks at the start of the rebellion against Gadhafi’s four-decade rule in February.

Crowds cheered in the square, lined with buildings scarred by bullets and tank fire and whose interior walls still bear scribbled graffiti calling Gadhafi a dog.

Last week there were demonstrations in Tripoli and the southern city of Sebha and then three in a row starting Thursday, in Ajaylat near the Tunisian border, Zlitan, not far from rebel-held Misrata and then Zawiya.

Each drew up to 10,000 cheering supporters _ though Gadhafi described the crowds as millions-strong and sending a message of defiance to NATO and the world. Libya has a population of about 6.5 million.

For foreign journalists, bused to each site and carefully monitored by government minders, it was impossible to tell the sincerity of the screaming crowds in each town or if they were really even from there freecreditscore.

On the road to Zlitan, west of Tripoli, buses and trucks filled with flag-waving supporters sped to the site of Friday’s demonstration. At the rally, a man rode through the crowd on a camel dyed green, the color of the Libyan flag.

In Ajaylat on Thursday, some members of the crowd who relentlessly chanted “God, Moammar, Libya and that’s it” afterward admitted they had come from Tripoli, an hour and a half drive away.

Zawiya, however, remained the biggest mystery, for in this city of 200,000, residents fought tooth and nail against Gadhafi’s forces before it was retaken with heavy weaponry.

Next to the cheering crowds, horsemen in traditional dress gave children rides in a sandy vacant lot where once the mosque stood that townspeople took refuge in before it was bombarded and razed by government forces.

Many townspeople just silently watched the demonstrators in the main square, but declined to speak with journalists. The rally also featured a much heavier security presence than past events.

Above the square loomed an office tower with whole floors scarred by fire and windows gaping open where artillery rounds had slammed into the building.

The floors were littered with broken glass and empty shell casings from the fierce battles fought here to drive out the rebels.

Despite the destruction someone had come through and carefully painted over all the anti-Gadhafi graffiti left inside by rebels.

“Gadhafi is a criminal” and “to hell with Gadhafi and his sons,” could still be read through the paint. In one spot, someone had come back after the destruction and written in a magic marker, “Free Zawiya.”

Many of the people in the crowds, especially in the other cities, however, seemed truly sincere in their support. Gadhafi has carefully changed the narrative of the struggle from one about a rebellion to a story of foreign aggression against the Libyan people.

“We love Moammar Gadhafi, because he is our father,” said Iman Haj, a young woman wearing a headscarf with mirrored sunglasses at the Ajaylat rally. She paused, “I don’t know why, but we love him.”

Of the rebels, she said: “They aren’t Libyans; they are people that don’t like Gadhafi who are taking drugs and drinking. He is in our blood,” she added, as the crowd surged around her chanting.

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Prime Minister Julia Gillard softened the impact of her unpopular carbon tax plans on Sunday by promising it will not increase Australian gasoline prices.

She said the tax would never be applied to gasoline despite transport being Australia’s third-largest and fastest-growing source of greenhouse gas emissions.

The government plans to tax big polluters for every ton of carbon gas they produce beginning July 1 next year in a bid to reduce Australia’s greenhouse gas emissions. The plan is weighing the ruling center-left Labor Party down in disastrous opinion polling because of fears about how it will affect costs, particularly electricity costs.

Key issues including the tax rate and how compensation will be distributed to help industry and households make the transition to a lower-carbon economy are still being negotiated with the minor Greens party and independent lawmakers whose support is crucial to the plan becoming law.

Gillard on Sunday ended some of the most politically damaging speculation that the tax would increase pump prices.

“Petrol prices will not be touched by carbon pricing,” Gillard told Australian Broadcasting Corp. television. “The design of this scheme is that petrol will be out now and out for the future.”

Her promise will anger the Greens party, which wants the tax applied across the entire economy.

Gillard credited rural independent lawmaker Tony Windsor with swaying her to exclude gasoline. Gillard relies on Windsor’s support to maintain a fragile single-seat majority in the House of Representatives.

“He has put forward a powerful case for people in country Australia who have got no choice but to jump in their cars and get places,” she said, referring to a lack of public transport outside big cities.

The Australia Chamber of Commerce and Industry said in a statement the gasoline exemption would will simply shift the price burden of reducing the nation’s emissions to other areas of the economy.

The government has promised to slash Australia’s greenhouse gas emissions by 2020 to at least 5 percent below 2000 levels. Australia is one of the world’s worst greenhouse gas emitters per capita, largely because it relies heavily on abundant reserves of cheap coal for electricity.

Conservative opposition leader Tony Abbott opposes polluters being forced to pay anything for the carbon gas that they create. His stance has helped his coalition lead in recent opinion polls.

Labor is hoping that public hostility toward the tax will have subsided before Australia’s next elections are due in 2013.

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Chinese railway authorities say all is ready for the opening of a showcase high-speed railway between Beijing and Shanghai later this month.

Railways Ministry Vice Minister Hu Yadong told reporters in Beijing on Monday that tickets for the rail link between the China’s top two cities would range from 410 yuan to 1,750 yuan ($63 to $270), depending on speed and class of train seat.

The fastest travel time on the 1,318-kilometer (813 mile) line will be five hours, or about half the current time, and the longest to just under eight hours, he said in a transcript posted on the ministry’s website.

Trial operations for the new rail line began May 11. Its formal inauguration coincides with the July 1st 90th anniversary of the founding of the ruling Communist Party.

“We can proudly say that the Beijing-Shanghai high-speed railway is China’s own, independent landmark project,” Hu said.

Hu said the railway was designed to ensure absolute security and safety. Earlier, the top operational speed for its trains was cut to 300 kilometers per hour (186 mph) from the originally planned 350 kph (217 mph), after questions were raised about safety.

China will continue to run 136 ordinary trains between the two cities, Hu said.

Overall, China aims to have 8,000 miles (13,000 kilometers) of high-speed rail in place by the year’s end and twice that length by 2020. Ticket prices now range from 179 yuan ($27.50) for a seat on the slowest trains to 730 yuan ($112) for a sleeper berth on the fastest ones.

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NATO and its partners in the military campaign to protect Libyan civilians have decided to extend their mission another 90 days, the alliance’s top official said Wednesday.

“This decision sends a clear message to the Gadhafi regime: We are determined to continue our operation to protect the people of Libya,” said NATO Secretary-General Anders Fogh Rasmussen. Gadhafi is trying to withstand the NATO air barrage and put down a rebellion among his own people.

British Foreign Secretary William Hague welcomed the extension, saying it was an “important reaffirmation” of the world’s commitment to protect Libyan civilians.

In Rome, meanwhile, Libyan oil chief Shukri Ghanem said Wednesday he had defected and now supports the rebels, a major blow to the Libyan leader.

“In this situation, which is unbearable, one cannot continue working,” Ghanem told reporters at a Rome hotel. He said he now united himself with the “Libyan youth” who were fighting to build a constitutional democracy in the country.

In Brussels, NATO and its partners in the military campaign to protect Libyan civilians decided to extend their mission for another 90 days, the military alliance’s top official said Wednesday.

Wednesday’s decision came during a meeting of ambassadors from the 28 NATO countries plus ambassadors from the five non-NATO countries participating in the Libya campaign _ Jordan, Qatar, Sweden, the United Arab Emirates and Morocco _ said Carmen Romero, the NATO’s deputy spokeswoman no faxing pay day loans.

The military alliance took over command of the operation on March 31 after difficult negotiations among its members. Unanimity of 28 is required for action, and the operations to enforce a no-fly zone and use air power, based on a U.N. Security Council resolution that calls for the protection of civilians, were authorized for an initial 90 days.

That time would have expired June 27. The decision to extend the campaign was taken nearly a month ahead of time to allow the participating countries to do their internal planning, Romero said.

NATO also is enforcing a U.N. arms embargo against Libya. That part of the operation has no time limit.

Critics have charged that the military campaign has turned into a stalemate and said it is difficult to dislodge a government through air power alone. But NATO, while maintaining that regime change is not its goal, says it has significantly diminished Gadhafi’s ability to attack civilians.

Fogh Rasmussen said in a statement that the extension of the campaign carries a message not only for Gadhafi but for the Libyan people.

“NATO, our partners, the whole international community, stand with you,” he said. “We stand united to make sure that you can shape your own future. And that day is getting closer.”

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Nicole Winfield reported from Rome

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U.S. stocks edged lower on Monday as investors shifted their focus back to the economy and earnings news.

It was a reversal from the initial positive reaction to the news that Osama bin Laden had been killed by U.S. forces. Traders and investors said it will take more to sustain a longer rally.

The Dow Jones industrial average (INDU) fell 3 points, or less than 0.1%, to 12,807. The Dow had been up as much as 60 points earlier in the day.

The S&P 500 (SPX) fell 2.4 points, or 0.2%, to 1,361; and the Nasdaq Composite (COMP) lost 9 points, or 0.3%, to 2,864.

"Once the bin Laden news settles and earnings season slows down, we’ll be due for a pullback," said Fred Dickson, chief market strategist with D.A. Davidson & Co. "Bin Laden’s death doesn’t eliminate the risk factors and it doesn’t settle the political uprising issues in the Mideast."

Monday’s losses ends what was a five-day long positive streak for the S&P 500 and Dow.

Alcoa (AA, Fortune 500), Merck (MRK, Fortune 500) and American Express (AXP, Fortune 500) led the blue chips higher Monday, but shares of Microsoft (MSFT, Fortune 500) offset the gains and weighed down the tech sector. Applied Materials (AMAT, Fortune 500) and Whole Foods (WFMI, Fortune 500) were the Nasdaq’s biggest laggards.

The losses on Monday come after stocks finished their best month this year on Friday.

Stocks have headed higher since the beginning of the year amid strong earnings. Despite jitters about the economy and concerns about inflation, April was the best month for the three indexes since December.

Corporate earnings have largely come in above expectations, but last week’s weak GDP reading and higher-than-forecast jobless claims show there’s still cause for concern about the U.S. economic recovery.

U.S. investors will get the April jobs report, a closely watched gauge of U.S. economic activity, this upcoming Friday.

Commodities and currencies: Oil prices edged lower with June oil futures falling 0.4% to $113.52 a barrel.

"Oil can be a globally emotional, reactive market, and any time that geopolitical risk is reduced there is less fear in the oil markets," said Derek Hoffman, chief executive and founder of Wall St payday loan online. Cheat Sheet. "The news that there was a successful effort to find, capture and kill the number one terrorist in the world is a positive sign."

Gold prices also backed off their highs Monday. Gold futures for June delivery fell $9.50 to $1,547.00 an ounce, after hitting an intraday high of $1,577.40 an ounce.

Meanwhile, silver prices plunged nearly 10% to $44.12 an ounce on concerns that the precious metal, which is up nearly 40% this year, is overbought.

In currencies, the dollar fell against the euro, but gained strength against the Japanese yen and the British pound.

Bonds: The price on the benchmark 10-year U.S. Treasury edged higher, pushing the yield down to 3.29%.

It’s shaping up to be a big week for bonds, with the Treasury Department expected to announce details of its quarterly refunding on Wednesday.

World markets: Markets around the world had a muted reaction to Osama bin Laden’s death, with Britain’s FTSE 100, the Hang Seng in Hong Kong and the Shanghai Composite all closed for holiday.

Other European markets rose slightly. The DAX in Germany rose 0.3% and France’s CAC 40 closed up 0.1%. Japan’s Nikkei ended the session 1.6% higher.

Economy: The Institute for Supply Management said its April manufacturing index fell to a reading of 60.4%, better than the reading of 58.5% that economists had expected.

Companies: The Nasdaq-100 index will be rebalanced to reduce the weight of Apple’s stock by about 40%. Apple (AAPL, Fortune 500) currently represents 20.5% of the index. After the rebalancing, Apple’s weight will be reduced to 12.3%.

Shares of TiVo (TIVO) closed up 3% after DISH Network Corporation (DISH, Fortune 500) and EchoStar Corporation (SATS) announced they will pay TiVo $500 million to settle an ongoing patent dispute.

Separately, DISH reported earnings per share of $1.22 for the quarter ended in March, easily topping forecasts. Also, DISH said it gained approximately 58,000 net subscribers during the quarter. Shares of DISH jumped 19%. 

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