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U.S. stocks drop sharply on worries over Europe

By Matthew Craft

Associated Press

Published: Monday, May 14 2012 9:34 a.m. MDT

NEW YORK — A political stalemate in Greece rattled financial markets worldwide on Monday, sending U.S. stocks lower.

The price of oil and Treasury yields hit their lowest levels of the year. The euro sank to a three-month low against the dollar.

The Dow Jones industrial average dropped 104 points to 12,716, a loss of 0.8 percent. The Dow has now lost more than half of its gains for the year in two weeks as worries resurface about Europe and the strength of the U.S. economy.

Political parties in Athens resumed power-sharing talks Monday as negotiations to create a government drag into a second week. The uncertainty has raised concerns that Greece could miss a debt payment and drop out of the euro currency. The worry is that if Greece leaves the currency union, bond traders may turn on other troubled countries in Europe and demand steeper borrowing rates on the government bond market.

In other trading, the Standard & Poor's 500 index dropped 12 points to 1,341. The Nasdaq composite fell 24 points to 2,909.

The losses swept across the market. Just two of the 30 stocks in the Dow were higher, Cisco Systems and Merck & Co. All 10 of the industry groups within the S&P 500 fell, led by financial stocks.

Major markets in Europe plunged. France's CAC-40 lost 2.9 percent, and Germany's DAX 2.3 percent. Benchmark indexes dove 3 percent in Italy and Spain.

Traders shifted money into the safest of government bonds, pushing Treasury prices up and yields down. The yield on the 10-year note fell to 1.77 percent, the lowest level this year.

Since hitting its high for the year on May 1, the Dow has been on a steady slide, closing lower on seven of the previous eight trading days. The Dow's 1.7 percent loss last week was its worst since Dec. 16.

Among stocks making big moves:

— JPMorgan Chase fell 2 percent in early trading, following news that its chief investment officer, Ina Drew, would step down. The bank said last week that it lost $2 billion in a trade on corporate debt.

— Yahoo gained more than 2 percent after the company replaced its CEO, Scott Thompson. Yahoo reportedly pushed Thompson out for padding his resume.

— Electronics retailer Best Buy Co. rose nearly 2 percent after the company's founder, Richard Schulze, said he would step down as chairman. An investigation found that he knew the CEO was having a relationship with a female employee and didn't tell the audit committee.

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