Bear Stearns sale hits global shares

By Herbert Lash

NEW YORK (Reuters) - Wall Street stocks moved lower on Monday after a fire sale of troubled Bear Stearns arranged by the U.S. Federal Reserve Bank slammed Europe and Asia with gaping losses but led to a milder reaction in the United States.

Global markets were driven by fear that the Fed's move to back JPMorgan (JPM.N) in taking over Bear Stearns reflected a widening of worldwide credit crisis that could engulf other banks and market participants.

In New York, however, equities were lifted by several rally attempts in morning trading and overall loses were half the level of other global markets.

"Much to everyone's shock," the Dow was not completely mired in negative territory, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

The need for a Fed bailout, however, kept trading cautious and jittery.

"We're in a position now where really the Fed is the only entity out there that can really help, to get the market back on track," said Kenny.

The dollar tumbled and investors piled into the safety of government debt following steep sell-offs of equity markets in Europe and Asia. U.S. stocks opened sharply lower but pared many losses and the Dow went in and out of positive territory.

Efforts by the U.S. Federal Reserve to restore battered investor confidence may have taken the edge off a grim mood in global markets. In an emergency move on Sunday the Fed cut a key lending rate and announced new measures to stabilize credit markets rocked by rising defaults on U.S. mortgage debt.