Stocks slide worldwide as concerns emerge on Greece debt crisis

NEW YORK — Stocks plunged around the world Tuesday as fears spread that Europe's attempt to contain Greece's debt crisis would fail. The euro fell to its lowest point against the dollar in a year.

The Dow Jones industrial average fell about 245 points, erasing its 143-point gain from Monday. The Dow and broader indexes each fell more than 2 percent. Treasury prices rose on increased demand for safety investments.

Stocks have seesawed in the past week as Europe's efforts to agree on a bailout package for Greece proceeded in fits and starts. An agreement finally came together over the weekend, but its ballooning size of $144 billion has investors worried that Europe would have an even tougher time assembling an aid package if a larger country such as Spain or Portugal were to get in trouble.

The market's plunge wasn't a surprise to some analysts who have warned for weeks that stocks were due for a big pullback. After Monday's rally, the Standard & Poor's 500 index was up almost 14 percent from its 2010 low of 1,056.74, reached Feb. 8. Investors have spent the past three months largely shrugging off the problems in Europe and focusing instead on the continuing signs of improvement in the U.S. economy.

One of the market's concerns now is that weakening economies in Europe could jeopardize the recovery in this country.

While Greece's economy is small, investors worry that other cash-strapped European governments could follow Greece into asking for emergency loans. Markets have been increasingly skeptical that Europe can act on its own restore the credibility of its shared currency, the euro.

"Everybody is worried about who is going to be next," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York.

The euro again fell against the dollar as traders turned away from the currency, which is used by 16 European Union countries including Greece. Investors have punished the euro over the past few months over doubts that Europe would be able to enforce fiscal discipline in Greece and other weak countries in the region in order to protect the euro.

"You are having a lot more discussions about possible contagion," said Anthony Chan, chief economist at J.P. Morgan Private Wealth Management in New York, referring to the prospect of a wave of bad debt spreading to other countries. "More people are raising questions about what was done in Greece will be sufficient."

Chan said the problems in Greece aren't yet large enough to pose a major risk to a global rebound. Instead, traders are selling while they wait for answers about how the financial woes in Europe will be resolved.