Libya unrest rattles markets; oil prices jump

NEW YORK — Stocks fell sharply and oil prices spiked to their highest level in two years as unrest in worsened in Libya.

Oil prices jumped 6 percent to $95 a barrel Tuesday.

The Dow Jones industrial average fell 178 points, or 1.4 percent, to close at 12,213. Bond prices rose as investors sought safety. Growing instability in the region could disrupt oil production.

Libyan leader Moammar Gadhafi vowed to fight to his "last drop of blood" and roared at his supporters to take to the streets against protesters demanding his ouster.

The S&P 500 index fell 27, or 2 percent, to 1,315. The Nasdaq fell 77, or 2.7 percent, to 2,756.

Falling stocks outnumbered rising ones nine to one on the New York Stock Exchange. Volume was 1.3 billion shares.