US stocks plummeted to their lowest close in almost 12 years, as investors displayed their lack of confidence that Washington will be able to stabilise the financial system.

The Dow Jones industrial average tumbled 250.73 points, or 3.40 percent, to 7,114.94, its lowest close since April 11, 1997, as another sell-off added to the six-percent drop in the Dow's value last week.

Bermuda's international companies were dragged down with the rest, as many insurers saw tens of millions of dollars more wiped off their already battered market capitalisations.

XL Capital, Ace, Arch Capital, Argo Group, Assured Guaranty, Endurance, IPC Holdings, Max Capital and Ram Holdings all saw their share prices fall by more than five percent.

The Bermuda Stock Exchange, which had plunged to its lowest close since December 2003 on Friday, bounced back yesterday, gaining 2.1 percent thanks to a surge in KeyTech Ltd. shares.

But there was more bad news for Butterfield Bank, whose stock price fell to below $8. The bank has now lost 24.4 percent of its value this year, following on from its 37 percent fall in 2008.

The S&P 500, a wider measure of US stocks than the Dow, also recorded its lowest close since the spring of 1997 as reports the government may convert its stake in Citigroup into a big common stock holding fell short of what many see as necessary to fix big banks.

"It is generally a market 'no' vote to what we're getting from Washington," said Hank Smith, chief investment officer at Haverford Trust Co in Philadelphia, of the reaction to the Citigroup news.

"It certainly doesn't inspire confidence when you do break multi-year lows, so it's just feeding into a real negative cycle that we're in right now," he said.

In addition, worries about a decline in business and consumer spending on technology hurt the biggest names in the tech sector. IBM and Hewlett-Packard were the two of the biggest drags on the Dow industrials, with IBM shedding 5.0 percent to $84.37 and Hewlett-Packard sliding 6.3 percent to $29.28 a share.

The market capitalisation of the Dow fell $77.1 billion yesterday. The index is down nearly 50 percent from its record high close in October 2007, with about $10 trillion of value in wiped out since then.

So far this year, the Dow has fallen 18.9 percent while the S&P 500 has shed 17.7 percent and the Nasdaq has dropped 12 percent.

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