U.S. stocks fell broadly Monday on lingering fears about European countries' indebtedness, despite their fiscal pact last week. All 30 stocks in the Dow Jones industrial average declined.
European markets were sharply lower, after soaring late last week on optimism about progress toward solving the region's debt crisis. Most European governments agreed to forge closer budgetary ties. A central European authority would punish nations that overspent.
Over the weekend, concerns intensified that the pact does not address Europe's root problem: The heavy debt loads of many nations and their rising borrowing costs.
The Dow fell 120 points, or 1 percent, to 12,063 in the first 20 minutes of trading. Its biggest loser was Intel Corp., which fell 3.8 percent after the chipmaker sharply reduced its fourth-quarter revenue outlook because of a shortage of hard disk drives.
The Standard & Poor's 500 index fell 15 points, or 1.2 percent, to 12,240. All 10 of its industry groups lost ground. The Nasdaq composite index dropped 39 points, or 1.5 percent, to 2,608.
Last week's deal would allow for a central European authority to oversee future budgets for the 17 countries that use the euro. Six other nations will consider it. Britain is the lone holdout.
The accord is not a lasting solution because it doesn't reduce the massive debt already threatening many European nations. Greece, Portugal and Ireland have had to accept bailouts. Italy and Spain are teetering because their debts scare investors, who in turn ratchet up their borrowing costs.
Stocks in Spain and Italy led European markets lower Monday. Spain's IBEX 35 fell 2.4 percent, Italy's FTSE MIB 2.9 percent. France's CAC 40 fell 1.9percent, and Germany's DAX 2.4 percent.
Credit rating agency Moody's said last week's summit "offers few new measures."
"The announced measures therefore do not change Moody's previously expressed view that the crisis is in a critical and volatile stage," Moody's said, warning that it still intends to review all EU governments' ratings for possible downgrades during the first three months of 2012.
Asian stocks closed mostly higher, catching up with Friday's rally in the U.S. and Europe. Japan's Nikkei 225 index jumped 1.4 percent. Benchmarks also closed higher in South Korea, Singapore, Taiwan, Australia and Indonesia.
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