* Banks, basic materials shares lead decline
* Brazil economy slows sharply, euro zone near recession
* Dow down 1.6 pct, S&P off 1.6 pct, Nasdaq off 1.5 pct
By Rodrigo Campos
NEW YORK, March 6 U.S. stocks fell the
most in nearly three months on Tuesday with the Dow tumbling
more than 200 points as recent government data rekindled
concerns about global growth and a deadline loomed for private
holders of Greek debt to agree to hefty losses.
Volatility soared, with the CBOE Volatility Index or VIX
on track to close above its 50-day average for the first
time since November. More than a dozen stocks fell for every
rising issue on the New York Stock Exchange, with bank and miner
shares among the top decliners.
The recent gains in equities have been supported in part by
expectations that Europe's credit crisis will be contained and
China's economy will avoid a hard landing. Recent data seems to
partly undermine those assumptions.
"The concern in the market is the realization that China is
affected by Europe as much as anyone else is," said Art Hogan,
managing director of Lazard Capital Markets in New York.
Europe's downturn appeared ready to turn into a full-fledged
recession due to a collapse in household spending, exports and
manufacturing in the final months of 2011, the European Union
Brazil's gross domestic product expanded by a meager 2.7
percent in 2011, data showed Tuesday, adding to concerns after
China cut its growth outlook earlier in the week. Expected
growth in emerging markets has been a main catalyst for
The Dow Jones industrial average lost 204.57 points,
or 1.58 percent, to 12,758.24. The S&P 500 Index dropped
21.66 points, or 1.59 percent, to 1,342.67. The Nasdaq Composite
fell 43.27 points, or 1.47 percent, to 2,907.21.
Despite the decline, the S&P 500 is still up 7 percent for
the year. If fourth-quarter gains are included, the benchmark
index is still up almost 20 percent since Sept. 30. Analysts
have expected a pullback for weeks, citing an overstretched
A group representing bondholders warned a default could
cause more than 1 trillion euros ($1.3 trillion) of damage to
the region. Creditors have until Thursday night to accept a bond
swap in which they would lose almost three-quarters of the value
of their bonds.
"If there is not enough participation in that part of the
deal, what we have can fall apart," Lazard's Hogan said.
As part of a reassessment of possible collateral damage if
the Greek deal with private debt holders collapses, traders sold
the stocks of large banks on concern about their exposure to
The S&P financial sector index dropped 2.4 percent
and the KBW bank index fell 2.7 percent. Morgan Stanley
lost 5.3 percent to $17.32.
A gauge of European bank shares tumbled 4.2 percent.
Greece has no plans to extend the deadline on its bond-swap
offer to private creditors, officials said, dismissing market
rumors that the date may be changed to increase participation in
Basic materials stocks were also hurt as commodity prices
fell, pressured further by a stronger U.S. dollar.
Aluminum producer Alcoa Inc slid 4.2 pct to $9.47 and
Freeport-McMoRan Copper & Gold Inc lost 2.9 percent to
The CRB commodities index fell 1.4 percent, down for
a third straight session.