Dow Jones Industrial Average Drops As Brexit Worries Push Down World Stock Markets

Stock markets around the world fell Monday amid concerns Britain may be on the verge of leaving the European Union after the June 23 referendum on its membership, an outcome that could adversely impact the global economy.

A vote to leave the 28-member bloc, dubbed "Brexit," could tip Europe back into recession and has surged to the forefront of investor concerns.

Uncertainty over the outcome of this week's Federal Open Market Committee policy meeting added to market worries, though the U.S. central bank is expected to leave interest rates unchanged. A much weaker-than-expected U.S. employment report for May drastically reduced the chances of the Fed hiking rates in either June or July.

Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said Brexit fears have kept the market on edge. He cited the unknown impact on the British economy, as well as the fact that an exit would "present the first formal challenge to the current global economic order and could spark a much wider and more dangerous fracture of the European Union."

The euro dropped to its weakest value against the yen since February 2013. Sterling, which was down broadly, also fell to a three-year low.

Wall Street was down, with Microsoft Corp. shares falling 2.6 percent to $50 after the company said it would buy LinkedIn for $26.2 billion.

The Dow Jones industrial average closed the day down 133 points, or 1 percent, at 17,732, while the S&P 500 lost 17 points, or 1 percent, to 2,079, and the Nasdaq composite dropped 46 points, or 1 percent, to 4,848.

European shares fell to their lowest level in more than three months, hit by widespread unease in markets over the possible British exit from the EU. The FTSEurofirst 300 closed down 1.9 percent.

U.S. Treasury yields fell to a four-month low as Brexit fears sapped investor risk appetite.

Benchmark 10-year notes were last up 2/32 in price to yield 1.63 percent, after earlier hitting 1.61 percent, the lowest since Feb. 11. Ten-year yields in Germany remained near zero, close to record lows.

Oil prices were down in volatile trading. Brent dipped 22 cents to $50.32, while U.S. crude futures declined 19 cents to settle at $48.88.

Reuters contributed to this story.