Stocks sliding on fears of Irish bailout and Chinese demand slowdown

U.S. stocks are sliding on fears over inflation in Asia and the growing likelihood that Ireland’s battered economy may need a cash bailout from the European Union (EU).

Earlier in the session, The Dow Jones Industrial Average slipped below 11,000 for the first time in almost a month.

As of 2:30 p.m. (EST), the Dow Jones is down 189.59 points, or 1.69 percent, to 11,012.38 . The S&P 500 has fallen 20.86 points, or 1.74 percent, 1,176.89; and Nasdaq has lost 42.04 points, or 1.67 percent,
to 2,471.78.

Overnight, South Korea's central bank hiked interest rates to curb inflation, leading to speculation that China may take similar steps to pull back its overheating economy, thereby hurting Chinese demand.
As a result, commodity prices plunged (oil futures are down 2.47 percent; gold is down 2.27 percent).

A group of European finance ministers met in Brussels to ascertain if Ireland needed a bailout. Irish Prime Minister Brian Cowen stated to parliament that the country has made no application for external support. He asserted Ireland will be able to meet its funding needs until mid-2011. However, according to media reports, the European Union is pressuring Dublin to accept a bailout.

Stock indices in Europe/UK suffered heavy losses.

The dollar surged against the euro as well as the pound sterling.

Bond prices are higher as the yield on the 10-year Treasury note edged down to 2.89 percent from 2.95 percent.