U.S. big-bank stocks, already outcasts on Wall Street this year, now are being tainted by Europe's debt woes.

The U.S. market’s decline on Monday was led by the financial sector, which tumbled in sympathy with the steep sell-off in many European bank stocks.

Bank of America’s shares slid 35 cents, or 3.3%, to $10.35, the lowest since May 2009 -- when the market was just beginning to recover from the 12-year lows reached in March of that year.

Morgan Stanley fell 72 cents, or 3.2%, to $21.58, the lowest since April 2009. JPMorgan Chase shares lost $1.31, or 3.2%, to $39.43, a seven-month low.

The chart below shows an index of 81 financial stocks in the Standard & Poor’s 500 index. The financial index is down 5.8% this year, the only one of 10 major industry sectors in the red for 2011. The S&P 500 overall is up 4.9% year to date.

Europe’s debt crisis is spreading from the smaller economies of Greece, Ireland and Portugal to the two biggest economies of southern Europe: Spain and Italy. Market yields on Spanish and Italian bonds have risen for six straight sessions as investors demand ever-higher returns to buy the countries’ debt.

As yields climb the risk is that it will become too expensive for Spain and Italy to roll over their existing heavy debt burdens at market rates. That’s what forced Greece, Ireland and Portugal to seek bailouts from the rest of the European Union over the last 14 months.

Andrew Busch, public policy analyst at BMO Capital Markets in Chicago, notes that many global investors already are assuming that Greece will have to default on part of its debt, which likely would mean losses for European banks that own Greek bonds.

But the prospect of Italy and Spain facing debt payment problems is mortifying for the financial sector. Italy’s debt still appears manageable, Busch said, “But perception is reality when it comes to these things.”

Federal Reserve Chairman Ben S. Bernanke said last month that major U.S. banks had little “direct” exposure to government debt of Greece, Ireland and Portugal. But even in those cases, he said, a “disorderly default in one of those countries would no doubt roil financial markets globally” as investors ran for cover.

For the big banks, the main fear is that the debt “contagion” could cause lenders to begin cutting off short-term credit to one another, as they did after brokerage Lehman Bros. failed in 2008. That could cause the financial system to seize up.

Benchmark short-term interest rates have risen in Europe in recent days. The so-called London Interbank Offered Rate, or LIBOR, rose Monday to 1.381% for one-month euro loans, up from 1.345% on  Friday. Some of that reflects the European Central Bank’s latest boost in its key rate, to 1.5% from 1.25% on Thursday. But the ECB’s move had been expected.

By contrast, LIBOR for one-month loans in dollars has been unchanged in recent days at 0.186%.

Even without Europe’s debt mess, U.S. big-bank shares have been market pariahs this year. A lack of loan growth, state lawsuits over alleged foreclosure abuses, a worsening housing market and regulatory pressures at the federal level have driven many investors away from the stocks.

JPMorgan Chase and Citigroup are due to report second-quarter earnings on Thursday and Friday, respectively. The question is whether they can tell investors anything new to dispel the dark cloud over their stocks.

-- Tom Petruno

RELATED:

Wall St. bets on earnings to bolster U.S. stocks as Europe worsens

Stocks at mid-year: A market of two minds

Amazon.com Inc. plans to put a referendum on the California ballot to strike down the state’s Internet sales tax law that went into effect 11 days ago.

“This is a referendum on jobs and investment in California,” said Paul Misener, Amazon’s vice president of global public policy in Washington, D.C. “We support this referendum against the recent sales tax legislation because, with unemployment at well over 11%, Californians deserve a voice and a choice about jobs, investment and the state’s economic future.”

Amazon has insisted that it will not collect the 7.25% base sales tax on purchases made by California customers. Instead, the Seattle retail giant filed the needed documents Friday with the California attorney general’s office to seek a referendum.

Two weeks ago, the company severed all business ties with about 10,000 affiliated websites in California that earn commissions by referring buyers to Amazon. One of the key criteria for imposing the duty to collect sales tax under the new law was the online retailer’s connections to businesses in the state.

Legislators wanted to level the playing field between online-only sellers based out of state and the bricks-and-mortar retailers, such as Wal-Mart Stores Inc. and Best Buy Co., that must collect sales taxes.

ALSO:

Capitol Journal: Californians are paying a high price for a low car tax

Apple denied injunction to stop Amazon's use of 'appstore' name; trial date set

-- Marc Lifsher

Photo credit: Paul Sakuma / Associated Press

The makers of luxury autos keep fighting to find ways to distinguish their brand from their competitors.

On Monday, Nissan said its upscale Infiniti division will offer a free concierge service for buyers of its vehicles.

The Infiniti Personal Assistant will give owners unlimited 24-hour access to a live team of professional assistants who can provide driving directions, weather forecast, dining suggestions and reservations, travel arrangements and sports scores through the car’s Bluetooth system or even away from the vehicle by phone.

The service is good for four years to one registered driver of the vehicle and is not transferable. Service for a second driver is $199 at the time of the car’s purchase. Other makes, including BMW and Cadillac, charge for similar services. 

But other manufacturers offer a range of other enticements to attract buyers.

BMW includes four years of maintenance with the purchase of its vehicles.

Equus, luxury sedan from Hyundai, comes with an iPad instead of an owner’s manual and a concierge service for maintenance. An Equus technician will come to the owner’s house or office when the vehicle
needs service, pick up the car and drop off a loaner car.  Equus then brings the serviced vehicle back to the owner.

“The brands tend to offer things based on their strengths,” said Dan Hall, an analyst at AutoPacific, an industry consulting firm in Tustin. “Lexus doesn’t offer years of maintenance because they are
known for being reliable. But BMW is known as Break My Wallet, so they had to do something.”

RELATED:

Cheats claim sports cars as farm vehicles

Californians pay more for auto repairs

New cars sold without spare tires

-- Jerry Hirsch
twitter.com/LATimesJerry

Photo: The 2011 Infiniti M56. Credit: Nissan North America

European financial markets crumbled Monday as government bond yields surged again in Spain and Italy, deepening fears that the continent's debt crisis had entered a far more dangerous phase.

U.S. stocks also were broadly lower. Gold hit a record high in early trading as investors ran for cover, and the euro plunged.

[Update: The Dow Jones industrial average closed down 151.44 points, or 1.2%, to 12,505.76. Most broader U.S. indexes lost between 1.2% and 2% for the day.]

While European authorities still are wrestling with bailouts of Greece, Ireland and Portugal, the “contagion” from the debt crisis has spread to Spain and Italy over the last week. Market yields on Spanish and Italian bonds have risen for six straight sessions as investors demand ever-higher returns to buy the countries’ debt -- a sign of waning confidence.

The yield on 10-year Italian bonds (charted below) soared to 5.68% from 5.27% on Friday and 4.91% a week ago.

The Spanish 10-year bond yield jumped to 6.03% from 5.68% on Friday.

Many analysts have warned for months that if the crisis ensnared Spain and Italy the future of the eurozone and the 12-year-old euro currency would be threatened because there is no way the rest of Europe could bail out those two huge economies.

“Spain and Italy are nearly five times the size of Greece, Portugal and Ireland and carry nearly four times the volume of debt,” said Michael Darda, economist at MKM Partners in Stamford, Conn. “Thus, they are a much larger threat to the integrity of the eurozone itself.”

European stock markets, which were hammered last week, tumbled again on Monday. The Italian market plummeted 4% after diving 7.2% last week. Spanish stocks slid 2.7% for the day, Portugal slumped 4.1%, France fell 2.7% and the German market sank 2.3%.

The euro plunged 1.7% to a four-month low of $1.402 from $1.426 on Friday.

German Chancellor Angela Merkel said at a press conference that Germany was "steadfastly determined to defend the stability of the euro." But she also said Italy needed to send an "important signal" to markets by agreeing to new austerity moves.

Gold hit a record high early in the session, reaching $1,557.60 an ounce, then eased a bit. The metal closed at $1,548.80 in New York futures trading, up $7.60 for the day. The record closing high was $1,556.70 an ounce on May 2.

U.S. Treasury bonds also benefited as investors sought safety. The 10-year T-note yield fell to 2.93% from 3.03% on Friday, even though budget-cutting negotiations between the White House and Republican leaders seem at impasse.

On Wall Street stocks fell at the opening bell and have been drifting since. The Dow industrials were off 148 points, or 1.2%, to 12,509 at about 11:10 a.m. PDT.

Market bulls have been clinging to hopes that second-quarter earnings reports will reenergize the U.S. market. Aluminum giant Alcoa Inc. will kick off earnings season after the closing bell Monday.

[Update: Alcoa reported operating earnings of 32 cents a share for the quarter, which appeared to just meet analysts' consensus estimate. The company said in its earnings release that its business outlook "remains positive."]

-- Tom Petruno

RELATED:

U.S. stocks at mid-year: A market of two minds

California's debt rating outlook raised by Standard & Poor's

Individual investors have grown disenchanted with stocks. Want proof? Google it.

To gauge small-investor sentiment toward the market, a Wall Street researcher tracked how often people perform searches for various investment-related words.

Nicholas Colas, chief market strategist at ConvergEx Group in New York, used Google Trends, a portion of the popular website that measures search patterns over time.

Terms such as “investing” and “stock investing,” hot topics among small investors during the dot-com craze a decade ago,  have fallen sharply in the last seven years, according to Colas. Even “bonds” has fallen from grace since 2004.

And the stock-market rally over the last two years has done surprisingly little to stoke interest -- perhaps because people are still nursing their wounds and remain wary of the economy.

“You’d be hard-pressed to point out any incremental interest in 'investing' despite the move higher for equities,” Colas wrote in a report to clients. “Market rallies, even those that go on for years, are not enough to engage them.”

The most popular investment-related term? Not surprising, it’s “saving,” with 6.1 million searches a month. That easily tops 823,000 for “investing” and a mere 60,500 for “stock investing.”

The rally in emerging markets two years ago produced a dash of excitement for “foreign stock.” But it didn’t last long and now generates only 12,100 searches a month.

“Bankruptcy” tied for the second-most popular term that Colas searched. But after hitting a peak in 2009, searches for “bankruptcy” have declined this year from their 2010 level.

That’s “the most heartening trend, both from a human as well as financial standpoint,” Colas wrote.

-- Walter Hamilton

Here's your monster-mash Monday roundup of consumer news from around the Web:

--Groupon is watching you. The deal site is changing its privacy policies to allow it to collect more information as it offers more deals targeted to users based on their locations. The company announced the changes in an email to its 83 million subscribers, saying the new policies are part of an effort to provide greater transparency about the way it handles private information about users. The announcement comes as the company seeks to go public and on the heels of its launch of Groupon Now, a mobile service that provides instant deals based on a user's location. "In short, if you use a Groupon mobile app and you allow sharing through your device, Groupon may collect geo-location information from the device and use it for marketing deals to you," the company said. The company also broadened its definition of "personal information" to include "interests and habits," and said a partnership that provides travel deals with Expedia means that personal information can be shared with the travel site if users subscribe to receive travel deals.

--Heads up: The Food and Drug Administration is advising consumers not to purchase or use "Slim Forte Slimming Capsules," "Slim Forte Slimming Coffee" and "Botanical Slimming Soft Gel," products for weight loss sold on various websites and distributed by InterCharm Inc. FDA laboratory analysis found that the products contain sibutramine, a controlled substance that was removed from the U.S. market in October 2010 for safety reasons. Sibutramine is known to substantially increase blood pressure and pulse rates in some patients, and may present a significant risk for patients with a history of coronary artery disease, congestive heart failure, arrhythmia or stroke. The products may also interact in life-threatening ways with other medications a consumer may be taking. The FDA says you should throw these things away immediately.

--Whoo-hoo! It's Free Slurpee Day! Our friends at 7-Eleven plan to give away 5 million free Slurpees to customers. Each free drink will come in a 7.11-oz. cup (get it?). The 9th annual "7-Eleven Day" marks the chain's 84th birthday. The first 7-Eleven opened in 1927 when an employee of an ice company near Dallas started selling bread, milk, and eggs on an ice dock. Other Slurpee milestones listed on the chain's website include the coining of the name "Slurpee" in 1967, introduction of a Slurpee lip balm in 1998 and the invention of an edible Slurpee straw in 2004. And for those who experience brain freeze, 7-Eleven says all you have to do is press your tongue against the roof of your mouth.

-- David Lazarus

Photo: Get 'em while they're cold -- it's Free Slurpee Day. Credit: Larry Crowe / Associated Press

Several refinery problems around the United States were forcing retail gasoline prices up around parts of the country, but California prices were relatively stable Monday.

In California, the average price of a gallon of regular gasoline was $3.780, down 0.5 cents since last week, according to the AAA Fuel Gauge Report. The Fuel Gauge Report uses retail receipts from more than 100,000 service stations across the United States, compiled by the Oil Price Information Service and by Wright Express.

According to Gasbuddy.com, there was a wide range of prices across California, including a low of $3.39 for a gallon of regular at the Reynolds Ranch Parkway Costco in Lodi and a high of $4.59 a gallon at the Shell station on West Olympic Boulevard at Fairfax Avenue in Los Angeles.

Nationally, the average rose 6.6 cents over the last week to $3.631 for a gallon of regular gasoline, the AAA Fuel Gauge Report said.

The refinery news included some of the nation's largest fuel producers, including BP's 475,000-barrels-a-day Texas City facility in Texas. BP Texas City has been running at as little as half-capacity since April and was not set to resume full production until August.

In Illinois, ConocoPhillips' 362,000-barrels-a-day Wood River refinery is operating at reduced rates. Chevron Corp. just recently restarted it's 330,000-barrels-a-day refinery in Pascagoula, Miss., that had been down since May 9. PBF Energy's 190,000-barrels-a-day Delaware City, Del., refinery, acquired last summer, has still not returned to service.

Husky Energy's 150,000-barrels-a-day refinery in Lima, Ohio, is still shut down for repairs. ExxonMobil's 60,000 barrels-a-day Billings, Mont., refinery is also running at reduced rates.

In other energy news, oil prices were tending down. The U.S. oil price benchmark, West Texas Intermediate crude, fell $1.88 to $94.32 per barrel Monday in trading on the New York Mercantile Exchange over inflation worries in China and as concerns continued over European debt problems.

-- Ronald D. White

Graphic: AAA's 12-month rolling average price for regular gasoline in California and the nation is shown. Credit: AAA

Gold: Trading now at $1,556 per ounce, up 0.9% from Friday. Dow Jones industrial average: Trading now at 12531.80, down 1.0% from Friday.

New Europe concerns. Stock markets are being sent down over concerns about yet another European economy -- this time it's Italy.

Firing bankers. The Wall Street Journal has the scoop on AIG potentially firing one of its Wall Street bankers after the company's disappointing recent sale of stock.

McKinsey speaks. The head of the consulting firm McKinsey speaks for the first time about the damage done to the company by revelations made about McKinsey during the Galleon insider trading case.

Deutsche's future. Wall Street hands are closely watching the succession battle at Deutsche Bank; it now appears that two new leaders may be chosen.

Banks winning. Newsweek has the latest take on how the financial industry has managed to win over Congress and water down the financial-reform bill.

-- Nathaniel Popper

Credit: National Geographic

Here is roundup of alleged cons, frauds and schemes to watch out for.

Burglary season -- The summer months of July and August typically have the highest rate of home burglaries, in part because many people leave town for vacations, the Better Business Bureau said in a recent alert. Homeowners should consider installing security systems before they vacation this summer, the BBB said. Homes without such systems are about three times as likely to be burglarized than those with the systems, it said. Consumers who buy such systems should be careful to ask for a report of all costs upfront and only use professional installers, the BBB said.

Penny stocks -- The Securities and Exchange Commission has filed civil lawsuits against several chief executives who paid bribes and kickbacks to artificially inflate the value of their companies’ stock. Some of the cases involved an undercover FBI agent who posed as an associate of a corrupt pension fund trustee who would buy stocks in the companies if he received a kickback. The companies involved included Real American Brands Inc., KCM Holdings Corp. and SmokeFree Innotec Inc., the SEC said in a news release. “Investors deserve better than secret investment strategies based on kickbacks and bribes,” said Robert Khuzami, director of the SEC’s enforcement division.  “As our charges make clear, these CEOs got more than they bargained for but exactly what they deserved for making illicit payments to manipulate microcap stocks.”

Beauty pageants -- Parents should be careful when responding to promotions for beauty pageants, which can sometimes include hidden fees and result in expensive disappointments, the Better Business Bureau said in a recent bulletin. In 2010, the BBB received more than 10,000 inquiries from consumers about beauty pageant promotions, the BBB said. Parents should investigate the pageants on the Internet to determine their qualifications and such things as whether refunds are allowed, it said.

-- Stuart Pfeifer

-- Retailers are ready for the all-important back-to-school season, which kicks off this month and is the second-largest sales drive of the year, accounting for 16% of the retail industry's annual sales. The International Council of Shopping Centers is forecasting a modest but healthy increase of 3% to $39 billion in sales for the three-month period.

-- EBay announced that it has agreed to acquire Zong, a provider of payments through mobile carrier billing, for about $240 million in cash. Zong allows shoppers to pay for purchases from their mobile phones or computers by simply entering their mobile phone numbers. Once Zong verifies the number (usually in a matter of seconds), the payment is cleared on the customer's existing wireless service account. 

-- When it comes to shopping decisions, men and women both rank brand familiarity as the most important reason they make a consumer electronics purchase, according to a new report from market research firm NPD Group. In the No. 2 and No. 3 spots, women prioritize electronics that work well with what they own already and have the features and benefits they want, while men like gadgets that are growing in popularity and offer "real solutions."

-- Andrea Chang

China’s inflation rate jumped to a three-year high in June, adding to the risk that fast-rising consumer prices pose to the world’s second-largest economy.

The country’s consumer price index climbed 6.4% from June of last year, compared with a 5.5% rate posted in May, China’s National Bureau of Statistics said Saturday.

The index was driven mostly by soaring food prices, which rose 14.4% from a year ago compared with 11.7% in May.

China is facing a shortage of pork, by far the nation’s most widely consumed meat, while crop harvests have been hurt by floods and prolonged droughts.

In anticipation of the inflation report, China’s central bank increased its benchmark interest rate Thursday for the fifth time since October. 

Zhou Xiaochuan, governor of the central bank, said Friday that taming inflation remained a top priority even though economic growth is expected to slow this year. Reports indicate that manufacturing activity and bank lending have declined in recent weeks.

China has been battling inflationary pressure since the government allowed record amounts of new bank loans to ward off the effects of the global recession, prompting local governments and developers to borrow billions to finance infrastructure and real estate projects. Rising interest rates are threatening to make the resulting high amounts of debt harder to pay off.

Moody’s said this week that the scale of problem loans to the country’s local governments may be greater than Beijing has estimated.

Although it’s unlikely China will meet its inflation target of 4% for the year, Chinese Premier Wen Jiabao said last month he was confident consumer prices could be kept under control.

--David Pierson

RELATED:

Italy and Spain rocked by fears of spreading debt 'contagion'

Dismal U.S. jobs report raises doubts about economic recovery

Amid China's economic transformation, many farmers struggle

Photo: A vendor waits for customers at a Beijing fruit stall. Credit: AFP/Getty Images