Global stocks fall sharply as Greek deal is held up

New York: Stocks had their worst day of the year on Friday after Greece hit a roadblock on its way to a critical bailout.

The Dow Jones industrial average closed down 89.23 points, or 0.7 per cent, at 12,801.23. The broader Standard & Poor's 500 finished down 9.31 points to 1,342.64. It was the first losing week for S&P this year.

Stocks were lower in much of Europe. The benchmark stock index in Athens fell 3.2 per cent. Germany's DAX was down 1.4 per cent.

Just a day earlier, investors had bought stocks after Greek Prime Minister Lucas Papademos and the heads of the three parties backing his government agreed to slash wages, lay off civil service workers and cut government spending.

That was seen as a step toward Greece's securing a ¤130 billion (Dh642 billion) international bailout that it must have to avoid defaulting on its debt next month and sending a shock through the world financial system.

On Friday, European fin-ance ministers insisted Greece agree to deeper cuts in wages and spending. More than 15,000 people swarmed the streets of Athens, some hurling paving stones at police. Four cabinet ministers have resigned over the cuts.

Disorderly default

"The economy in Greece is deteriorating faster than anticipated, and the austerity measures aren't particularly popular," said Mark Luschini, chief investment analyst at Janney Montgomery Scott. "There could be a disorderly default."

The decline in US stocks was broad, with all 10 industry categories in the S&P 500 down. Materials stocks fell the most, down 1.8 per cent. Energy and financial stocks both fell more than 1 per cent. The Nasdaq composite closed down 23.35 points at 2,903.88.

Since the start of the year, stocks have been generally rising on small daily gains because of good economic news and a sense that the worst of the debt crisis in Europe might be over. The Dow has risen 4.8 per cent in 2012 and seemed poised earlier alst week to break 13,000 for the first time since 2008. At its low point on Friday, the Dow was down 145 points. Its largest intraday loss so far this year was 159 points, on January 13, but the Dow has not closed down more than 100 points since December 28. Aluminium producer Alcoa dropped 3.3 per cent, the biggest fall among the 30 stocks in the Dow.

Major movers

LinkedIn rose 18 per cent. The online networking company announced that fourth-quarter earnings had soared and revenue doubled.

Jeans maker True Religion Apparel plunged 28 per cent. The company reported earnings that were far below what analysts were expecting. Analysts slashed their ratings on the stock, citing weak sales and big markdowns.

NYSE Euronext, the parent company of the New York Stock Exchange, rose 4.5 per cent, best among stocks in the S&P 500. It beat Wall Street estimates for revenue and profit. CEO Duncan Niederauer said the company would focus on growth and perhaps small acquisitions after a failed attempt to merge with a German exchange company.