THE BIGGEST intraday point drop on record in the Dow Jones Industrial Average may have been caused by an erroneous trade entered by a person at a big Wall Street bank, multiple market sources said last night.

The so-called “fat finger” trade apparently involved an exchange-traded fund that holds shares of some of the biggest and most widely traded stocks, sources said.

The trade apparently was put in on the Nasdaq Stock Market, sources said.

Several sources said the speculation was that the trade was entered by someone at Citigroup.

A Citigroup spokesman said it was investigating the rumour but that the bank currently had no evidence that an erroneous trade had been made.

US stocks plunged suddenly but briefly by more than 9 per cent – or almost 1,000 points – just after lunchtime in New York before recovering sharply.

Within 30 minutes markets had regained some poise, trimming losses to about 300 points.

Last night US market authorities said they were investigating the sudden slide amid reports that an inputting error by a trader may have exacerbated already jittery markets.

The New York Stock Exchange said initially that there were no system errors during the brief but heavy sell-off. However, NYSE Euronext later said there had been “erroneous trades”.

“There were a number of erroneous trades,” said NYSE spokesman Rich Adamonis. “Our guys just told me Nasdaq is investigating the erroneous trades.”

The collapse came amid growing anxiety that Greece could become the first euro-zone country to default on its debt repayments despite a €110 billion bailout from its European neighbours and the International Monetary Fund.

As Wall Street plunged, German chancellor Angela Merkel likened the wider crisis to “a battle of the politicians against the markets”.

“The speculators are our adversaries. That is why we have to weigh our words more carefully than ever and stand united,” said Dr Merkel.

The SP 500 index of leading US shares and the bluechip Dow Jones Industrial Average both closed 3.2 per cent lower last night. – (Reuters/Bloomberg/ Guardian service)