BofA results spark global equity rout

By Herbert Lash

NEW YORK (Reuters) - Crude oil fell almost 9 percent and stocks around the world fell sharply on Monday after a jump in troubled loans at Bank of America and renewed economic jitters cooled hopes that the worst of the global slowdown was over.

The U.S. dollar rallied broadly to trade at one-month highs as the slide in equity markets boosted the safe-haven demand for the greenback, U.S. and European government debt and gold.

Concerns about the quality of earnings at banks spilled over to other sectors and put a damper on investors' appetite for risk.

The Chicago Board Options Exchange Volatility index .VIX, which is regarded as a barometer of Wall Street fear, soared 16.1 percent in its biggest one-day percentage gain in three months.

The rout on Wall Street clipped a six-week winning streak, the longest for the S&P 500 since 2007 and a period in which the Dow scored its biggest six-week gain since 1938.

Bank of America (BAC.N) shares shed 24 percent after the biggest U.S. bank reported that its troubled loans jumped in the first quarter, even as its quarterly earnings more than doubled, helped by its purchase of Merrill Lynch & Co. The bank also warned it expects the credit situation to worsen.

Also hurting sentiment was a key gauge of future economic activity, which fell for the third month in a row in March, showing the U.S. recession may persist through the summer.

In yet another sign of weakness, Germany fell deeper into recession in the first quarter, the Bundesbank said, fueling expectations of a record contraction in gross domestic product.