GLOBAL MARKETS-, dollar gains

(Refiles to fix typo in headline)

* U.S. stocks slump as fear of more bank failures grows

* Dollar rises versus yen after strong U.S. factory data

* Oil slips below $69 a barrel on equities, strong dollar

U.S. stocks fell sharply on Tuesday as growing concerns about the U.S. banking system and over whether a recent rally in equity markets is warranted drove investors to the relative safety of bonds and the dollar.

The yen and dollar rose on Tuesday as fears of further U.S. bank failures overshadowed unexpectedly strong U.S. manufacturing data, boosting the two currencies’ safe-haven appeal.

Alabama regional lender, Colonial Bank, just became the 6th largest bank failure in U.S. history and the largest since Washington Mutual last year.

A large “mystery” bank is scrambling for late night cash.   At the close of the quarter, an unnamed bank paid 7% for overnight money from the Fed.  The mainstream and the Fed claim this to be normal behavior at the end of the quarter, but don’t believe it for a second.

Most investors want to abandon everything and run for cover thanks to all the bad news, stock collapses and recession. Can it get any worse? Sandy Franks of the Taipan Publishing Group says, “no.” So what do you do with your money now?

Byron King from Whiskey and Gunpowder thinks that we’ll see huge market declines in part because of a huge drop in consumer spending. As volatility increases and faith for the U.S. dollar circles the drain, two gold companies should soar.

Adam Lass says the US economy looks “dreadful” in the short term. And it faces long-term monetary ruin. But somewhere in between, he expects a new bubble to form. One that will make some investors huge profits. To survive until then, Adam says you must use put options on “deadbeats” like Kohls (NYSE:KSS) to hedge long positions on proven “survivors” like Macy’s (NYSE:M).

“Sagging fortunes.” Can’t get away from that catch-phrase these days. It’s a favorite of both sports and finance writers alike as in…The sagging fortunes of the Seattle Mariners (in baseball) and Roger Federer (in tennis). Or as in…

IndyMac Bancorp Inc. (IMB) based in Pasadena, California with 33 retail branches and $32 billion in assets was seized by federal regulators on Friday. One of the latest victims of the credit crisis, the bank was a major player in the real estate boom this maybe one of the largest bank failures since the savings and loan scandals of the early 80s…

But IndyMac had long focused tightly on mortgages to customers who can’t provide the documentation required for conventional home loans – what are known as “Alt-A” mortgages. This sharp focus left no other business line on which the company could lean, he said.

Other analysts share that view.

Frederick Cannon of Keefe, Bruyette & Woods Inc. said IndyMac had only “a limited…

As the subprime crisis bites, experts predict that as many as 300 US lenders will go out of business in the next two to three years. This from MarketWatch:

At least 150 banks will fail in the US during the next two to three years, according to a projection by Gerard Cassidy and his colleagues at RBC Capital Markets.