Washington - Financial shares led a sharp drop Monday on Wall Street after news of the collapse of a small bank in Kansas fed continuing worries about bad loans still on the books of companies in the sector.

Columbian Bank & Trust Co, based in Kansas, became the ninth federally insured bank to fail this year in the United States, a symptom of the continuing repercussions of the US mortgage crisis, which has plagued Wall Street since the deflation of a housing price bubble last year.

The blue-chip Dow Jones Industrial Average plummeted 241.81 points, or 2.1 per cent, to 11,386.25. The broad-based Standard & Poor's 500 Index fell 25.36 points, or 2 per cent, to 1,266.84. The technology-heavy Nasdaq Composite Index lost 49.12 points, or 2 per cent, to 2,365.59.

"The market's going to struggle until we get a clear indication that we know what the bottom is in the financials, and that may be a while," Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors, told the Bloomberg financial news agency.

Trading volume on Monday was the lowest of the year. Ten stocks lost ground for every one that gained. Among the losers were all 30 listings in the Dow industrials. (dpa)