U.S. stocks slid today as oil prices topped $100 a barrel, Europe’s debt crisis rolled on and Bank of England governor Mervyn King warned of the long slog ahead.

 

“The journey to a more balanced world economy will be long and arduous,” King warned in his quarterly report on inflation. “Activity could be broadly flat in the U.K. until the middle of next year. We continue to face a difficult environment.”

 

An off day for Wall Street turned into a much steeper selloff after Fitch Ratings said U.S. banks have manageable exposure to stressed markets in Europe, but cautioned that the continent’s troubles could spread.

 

“Fitch believes that unless the Euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen,” the debt watchdog said.

 

The S&P Retail Index fell 1.6 percent, or 8.64 points, to 538.44, and the Dow Jones Industrial Average fell below 12,000, dropping 1.6 percent, or 190.57 points, to 11,905.59 as trading settled.

 

Leading the way down was Abercrombie & Fitch Co., which fell 13.6 percent to $48.11 after posting weaker-than-expected third-quarter profits. Also on the wane were Saks Inc., down 6.2 percent to $9.73; Gap Inc., 3.2 percent to $19.50; Limited Brands Inc., 2.8 percent to $42.99, and Coach Inc., 2.5 percent to $62.76.

 

Oil futures shot up to as high as $102.89 a barrel today. A sustained increase in prices would eventually hit consumers and cause them to cut back their spending.

 

In Europe, markets were generally tepid as investors continued to closely watch the borrowing costs of Italy, which is transitioning to the leadership of prime minister Mario Monti.

 

Milan’s FTSE MIB closed up 0.8 percent at 15,425.50 points, followed by Paris’ CAC 40, which rose 0.5 percent to 3,064.90 points. The DAX in Frankfurt was down 0.3 percent at 5,913.36 points, while the FTSE 100 in London fell 0.2 percent to 5,509.02 points.

 

Retail and luxury stocks put in a mixed performance, with the day’s biggest gainers including Safilo Group, which advanced 10.4 percent to 4.76 euros, and French Connection, which rose 2.7 percent to 74 pence. Losing ground were Benetton Group, which fell 6.6 percent to 3.36 euros, and Marcolin, which tumbled 5.3 percent to 3.56 euros.

 

The euro traded at $1.35 while the pound traded at $1.58.

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