Stocks and the U.S. dollar sank on Monday after Lehman Brothers filed for bankruptcy protection, with a broad flight from risk igniting U.S. Treasury debt, gold and the low-yielding Japanese yen.

Adding to the mix of ingredients feeding the latest financial storm, American International Group Inc., one of the world's largest insurers, was reported to have asked the U.S. Federal Reserve for a $40-billion (U.S.) bridge loan, and the Fed expanded its liquidity provision facilities.

Classic financial market safe-haven gold jumped more than 2 per cent while U.S. Treasury yields, which move in the opposite direction to prices, fell to multi-month lows.

“What we're seeing is a rise in risk aversion because nobody really knows if there is a systemic problem in the U.S. financial system,” said Lutz Karpowitz, forex strategist at Commerzbank.

Glorieux