Sawt Falasteen - US stocks fall as regional bank angst adds to list of worries

After opening higher, US equities tumbled into the red around midday and lingered in negative territory thereafter.

All three major US indices finished lower, with the S&P 500 ending down 0.6 percent.

That came after a positive day on leading Asian and European bourses, including Paris, which climbed after French Prime Minister Sebastien Lecornu survived two confidence motions.

The VIX Volatility index -- a closely-watched benchmark of investor anxiety -- surged to its highest level since May, while gold prices set a new record.

"There's some emerging concerns about credit," Angelo Kourkafas of Edward Jones said of the drop in US equities. "Investors are taking a cautious approach."

The private market has been in focus following bankruptcies in recent weeks of two auto-related enterprises, the auto parts company First Brands and the subprime lender Tricolor.

Shares of Salt Lake City-based Zions Bancorp plunged 13.1 percent after the company disclosed a pair of problem loans to businesses with "apparent misrepresentations and contractual defaults," it said in a securities filing that announced a $50 million hit on the matter in the third quarter.

Other mid-sized and regional banks also fell, including M&T Bank, Comerica and Fifth Third Bancorp, all of which lost between four and seven percent.

Investors are "extrapolating" the instances of known problem loans to the potential to ensnare more banks, said Art Hogan of B. Riley Wealth Management.

The problem with banks is the "story of the day at a point when investors are already worried about a lot of other things," Hogan said.

In Europe, the Paris stock market climbed 1.4 percent on hopes of greater political stabilization.

London edged out a gain despite data that showed lackluster growth in the UK economy, six weeks ahead of the government's annual budget.

Among individual companies, Nestle shares surged more than nine percent after the Swiss food giant announced that it will cut 16,000 jobs worldwide over the next two years.

United Airlines fell 5.6 percent after reporting that earnings had dipped on higher costs. The carrier projected better than expected fourth-quarter profits on strengthening demand.

But Briefing.com noted that United's capacity additions could dent results if macro conditions "soften."

- Key figures at around 2010 GMT -

New York - Dow: DOWN 0.7 percent at 45,952.24 (close)

New York - S&P 500: DOWN 0.6 percent at 6,629.07 (close)

New York - Nasdaq Composite: DOWN 0.5 percent at 22562.54 (close)

London - FTSE 100: UP 0.1 percent at 9,436.09 (close)

Paris - CAC 40: UP 1.4 percent at 8,188.59 (close)

Frankfurt - DAX: UP 0.4 percent at 24,272.19 (close)

Tokyo - Nikkei 225: UP 1.3 percent at 48,277.74 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 25,888.51 (close)

Shanghai - Composite: UP 0.1 percent at 3,916.23 (close)

Euro/dollar: UP $1.1692 from $1.1607 on Wednesday

Pound/dollar: UP at $1.3436 from $1.3320

Dollar/yen: DOWN at 150.35 yen from 151.84 yen

Euro/pound: DOWN at 87.02 percent from 87.14 pence

Brent North Sea Crude: DOWN 1.4 percent at $61.06 per barrel

West Texas Intermediate: DOWN 1.4 percent at $57.46 per barrel

B.AbuZeid--SF-PST