US stocks slide on economic tremors from Europe

MATTHEW CRAFT AP Business Writer Published:

NEW YORK (AP) -- Stocks fell sharply Monday morning with new worries about Europe.

New reports showed that European government debt continues to pile up despite severe budget cuts that have led to unrest across the continent. European markets fell sharply.

The Dow Jones industrial average fell 163 points to 12,865 a half hour after the opening bell. The Standard & Poor's 500 index fell 18 points to 1,359. The Nasdaq composite fell 48 points to 2,952.

Figures reported by the European Union's statistics office confirmed the effects of budget-cutting programs on countries that use the euro currency. Even with widespread spending cuts, overall debt rose to 87.2 percent, the highest level since the euro was created.

Separately, a survey of the euro zone's manufacturing and services sectors unexpectedly fell in April.

Europe's major indexes fell hard. France's CAC-40 index dropped 2.7 percent. Germany's main index fell even more, 3.3 percent. The euro fell against the dollar.

U.S. government bond prices rose as traders shifted money into assets considered safe. The price of the 10-year Treasury note rose 50 cents for every $100 invested. That pushed its yield down to 1.92 percent from 1.96 percent late Friday.

Trouble in Europe is hurting Kellogg, which slashed its full-year forecast, blaming weak sales. Hasbro posted a first-quarter loss on falling sales and costs related to cutting jobs. Kellogg dropped 4.8 percent and Hasbro 3.5 percent.

Wal-Mart Stores sank 4 percent following a report in The New York Times about an alleged bribery campaign involving top executives at a Mexican subsidiary. The retailer said it was investigating for any breach of the U.S Foreign Corrupt Practices Act.

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