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Global Stocks Drop on Worries About China's Economy

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An investor rests her leg on a bench near an electronic board displaying stock prices at a brokerage house in Beijing, Jan. 4, 2016.
An investor rests her leg on a bench near an electronic board displaying stock prices at a brokerage house in Beijing, Jan. 4, 2016.

U.S. stock prices fell sharply in Monday’s trading following a selloff in China, a slump in Europe and rising tensions in the Middle East.

The Dow and the S&P fell around 1.6 percent while the NASDAQ lost more than 2 percent at the close of trading. The key U.S. indexes had been down even further in earlier trading.

The latest round of global market turmoil started Monday, when Chinese stocks plummeted around 7 percent, which prompted officials to stop trading for the day on the Shanghai and Shenzhen exchanges.

The selloff was sparked by another in a series of disappointing reports on Chinese manufacturing. Investors saw that as evidence that China’s economic growth is slowing down. China is the world’s second-largest economy and a key market for many other nations.

Japan's Nikkei index was down 3 percent and Hong Kong's Hang Seng fell more than 2.5 percent by the close of trading.

European markets followed Asia's lead, Germany's DAX lost more than 4 percent and the FTSE in London fell more 2 percent.

Crude oil prices were volatile. At one point, oil prices rose on concerns that rising tensions between key oil producers Saudi Arabia and Iran might reduce energy supplies. Later, priced declined as investors worried that slowing economic growth could cut energy demand.

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