Trouble in foreign banks appeared to be picking up steam. Ireland and Germany moved to guarantee bank deposits over the weekend. French bank BNP-Paribas took over the Luxembourg and Belgian operations of international bank Fortis and Italy's Unicredit initiated a search for $9 billion in capital, The Wall Street Journal reported.

In midmorning trading, the Dow Jones industrial average was down 323.29 points, or 3.13 percent, to 10,002.09. The Standard and Poor's 500 fell 3.86 percent, 42.47 points, to 1,056.76. The Nasdaq composite index lost 78.18 points, 4.01 percent, to 1,869.21.

The benchmark 10-year U.S. Treasury bond rose 22/32 to yield 3.518 percent.

The dollar was mixed Monday. The euro fell to $1.3545, compared to $1.3806 Friday. Against the Japanese yen, the dollar fell to 102.49 yen, down from 105.14 yen.

In Tokyo, the Nikkei average lost 465.05 points to 10,473.09, off 4.25 percent.

Fed steps in to prod Wachovia deal along WASHINGTON, Oct. 6 (UPI) -- The U.S. Federal Reserve bank is trying to negotiate a compromise between two banks trying to purchase parts or all of Wachovia Corp.

Unnamed sources said the Fed was relaying information between the three banks, not suggesting a solution, The New York Times reported Monday.

Wachovia accepted an offer in principle from Citigroup last week to purchase its banking operations for $1 a share. Four days later, Wachovia announced it was ready to accept an offer from Wells Fargo for its entire corporation for $7 a share.

A New York judge Saturday temporarily halted the $15.1 billion Wells Fargo deal but a superior court blocked that ruling, the newspaper said.

Fearing a prolonged legal battle that could drag down financial markets already in turmoil, the Fed stepped in, the Times reported.

Each company has a different view of the deal-making. Citigroup and Wells Fargo have both said they have exclusive rights to dealing with Wachovia. Wachovia, however, said it was now betrothed to Wells Fargo but was willing to negotiate.

"Citigroup is always free to make a superior offer to Wachovia," the bank said in a statement.

Consumer-led recession may be in progress CHICAGO, Oct. 6 (UPI) -- Falling retail sales have prompted some analysts to conclude that a consumer-led recession in the United States may be in progress.

Consumer spending accounts for two-thirds of the economy and with financial turmoil making headlines recently, consumers are becoming spending-shy, The New York Times reported Monday.

"The last few days have devastated the American consumer," Walter Loeb, president of consultant firm Loeb Associates told the Times. "They all feel poor," he said

"All the talk about how bad it is out there has started getting in my head," said Claudia Prindiville, a mother of three from Chicago "I still need to shop for my kids' school clothes but I am definitely buying less for myself," she said.

Many U.S. consumers don't feel the pinch in the availability of cash but they are watching their investments, retirement plans and homes all lose value, the Times reported.

Automobile retailers, restaurant groups and others are reporting sharp sales declines, the Times reported.

"We got killed during the back-to-school sales," Dave Cargerman, a clerk at a Chicago Office Depot told the Times. "And that time of year is usually our bread and butter."

East to West markets fall on bailout bill NEW YORK, Oct. 6 (UPI) -- Banks and governments in Europe scrambled through the weekend to prevent further unraveling of the global financial crisis.

The $700 billion bailout bill signed Friday by U.S. President George Bush didn't prevent further disarray, as stock markets plunged around the globe Friday and banks requiring rescues became evident in Italy, Ireland and Iceland, The New York Times reported Monday.

Markets in Asia and Australia fell Monday, typically down more than 3 percent after a global drop in markets averaging around 4 percent Friday.

After Ireland announced it would guarantee deposits at six major banks, other European banks complained Ireland had given itself an unfair advantage, the Times reported.

Germany announced it, too, would guarantee deposits.

Italian bank Unicredit said it needed to raise $9 billion in capital. A $15.2 billion bailout for international bank Fortis failed, however. The Netherlands took over its Dutch operations Friday. On Sunday, the Belgian government engineered a transfer of Fortis holdings to French bank BNP-Paribas, the Times reported.