By Tom Holian

The dollar rose against the euro and the pound this morning but fell versus the yen as global stocks dropped in response to renewed concerns about the U.S. automotive industry and banks

The Obama administration said over the weekend that General Motors and Chrysler LLC have not made sufficient progress in their efforts to become economically viable. The government will continue to keep the companies afloat with additional funds but warned that a “structured bankruptcy” is an option still on the table.

Treasury Secretary Tim Geithner said Sunday that the nation’s largest banks could still need “large amounts of assistance” before the financial system can be stabilized. He also said the government has about $135 billion left for bank bailouts.

“The blame for today’s selloff looks to be a sentiment shift towards the auto sector and financials, which are leading the way lower,” said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto, in a research report.

On Wall Street, stocks were down about 4% in afternoon trade. Asian and European markets also fell sharply.

The retreat comes after major U.S. stock indexes advanced for three consecutive weeks, gaining more than 20%, amid faint signs of an economic recovery.  But the rally faded Friday and selling gained momentum Monday as investors responded to the automaker situation.

The dollar and the yen, which are considered safe havens, often gain ground when stock prices fall as investors shy away from more risky assets.