Stocks fall in first hour as Greek deal is held up

BERNARD CONDON AP Business Writer Published:

NEW YORK (AP) -- U.S. stocks fell sharply Friday after Greece's bailout deal was put on hold, a day after it seemed that the country had satisfied its creditors.

In the first hour of trading, the Dow Jones industrial average dropped 122 points to 12,768. The broader Standard & Poor's 500 was down 12 points to 1,340. The Nasdaq composite fell 25 points to 2,902.

Investors had breathed a sigh of relief after Greek Prime Minister Lucas Papademos and the heads of the three parties backing his government agreed to private sector wage cuts, civil service layoffs and cuts in government spending.

But finance ministers from the other 16 countries that use the euro insisted that Greece save an extra €325 million ($430 million), pass the cuts through parliament and guarantee that they will be enforced after planned elections in April.

Greece needs another round of international bailout money, its second, to avoid missing a bond payment next month and defaulting, an event that could cause a shock in world financial markets.

The decline in U.S. stocks Friday was broad. All 10 categories of stock in the S&P 500 were down, led by materials companies, down 1.9 percent. Financial companies fell 0.9 percent.

Stocks have been generally rising on small daily gains this year because of good economic news and sense that the worst of the debt crisis in Europe may be over. The Dow has risen 4.5 percent in 2012. Its last loss of 100 or more points was Dec. 28.

The benchmark index in Athens fell 3.2 percent. Germany's DAX was down 1.6 percent. The CAC-40 in France was down 1.3 percent.

The euro, which had risen Thursday to its highest level against the dollar in two months, fell by a penny and was trading at just under $1.32. U.S. Treasury yields fell, a sign that investors were buying bonds as a safer investment than stocks.

Among stocks making big moves in the United States:

-- LinkedIn rose 11.5 percent. The online networking company announced that fourth quarter earnings had soared and revenue doubled.

-- Jeans maker True Religion Apparel plunged 24 percent. The company reported earnings that were far below what analysts were expecting and analysts slashed their ratings on the stock, citing weak sales and big markdowns.