US stocks posted their sharpest losses in more than a month on Monday, led by a broad sell-off of financial shares amid fears of more credit-related losses ahead, despite the banking sector's surprising profit gains in the first quarter of 2009.

The concerns were led by Bank of America Corp, which reported a 2.8-billion-dollar profit for the first three months of the year but said it was putting aside 6.4 billion dollars in case it had to write down more bad loans in future.

Shares of Bank of America tumbled 24 per cent. Citigroup Inc's stock price was down 19 per cent after Goldman Sachs Group Inc said the bank's credit losses were growing rapidly. An index of US financial stocks tumbled 11 per cent.

US stocks began the day lower after the Conference Board said its index of leading economic indicators dropped 0.3 per cent in March, more than analysts expected and the third straight fall this year. The New York-based research group warned that the US recession will likely continue through most of 2009.

The selloff comes after major stock indices posted their best six- week run in decades, amid some limited signs that the US economy may be stabilizing. Bank of America joined four other top US banks that have already reported surprising profits for the first three months of this year.

The blue-chip Dow Jones Industrial Average tumbled 289.6 points, or 3.56 per cent, to 7,841.73. The broader Standard & Poor's 500 Index plummeted 37.21 points, or 4.28 per cent, to 832.39. The technology-heavy Nasdaq Composite Index plunged 64.86 points, or 3.88 per cent, to 1,608.21.

The US currency rose against the euro to 77.42 euro cents from 76.67 euro cents on Friday. The dollar dropped against the Japanese currency to 97.94 yen from 99.16 yen.