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Stocks post biggest fall of '12; Dow sheds 1.6%

Fear on Greek bonds blamed for sell-off


A New York Stock Exchange trader watches prices fall. Tuesday's plunge started with the opening bell.

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NEW YORK -- U.S. stocks on Tuesday took their biggest drop this year, sending the Dow to a triple-digit loss.

Fears about the impact of a disorderly Greek bond default returned to the market, which had put concerns about the European financial crisis on the back burner.

The Dow Jones industrial average closed down 203.66 points at 12,759.15. The 1.6 percent decline was its worst percentage drop since Dec. 8 and was the Dow's first loss of more than 200 points since late November.

The Dow gave up more than a quarter of its 745-point advance since Jan. 1 -- the best start to a year since 1998.

The sell-off interrupted a period of unusual calm on Wall Street. Before Tuesday, the Dow had gone 45 straight trading sessions without losing 100 points, its longest streak since 2006.

The S&P 500 index sank 20.97 points, or 1.5 percent, to 1,343.36. It was the third straight losing session for the index and its worst day since Dec. 8.

The Nasdaq composite lost 40.16 points, or 1.4 percent, to 2,910.32, also extending losses to a third day. It was the index's worst percentage drop since Dec. 14.

Stocks fell sharply from the opening bell and never mounted a serious comeback. The Dow was down as much as 227 points. All but one of 30 stocks in the average finished lower. Intel Corp. rose 7 cents.

Apple Inc., the Nasdaq's largest component, fell 0.5 percent ahead of an event Wednesday at which the company is expected to unveil a new version of the iPad.

General Motors Co. fell 5.5 percent after saying it will pay $402 million for a 7 percent stake in French car maker Peugeot.

"You have to look across the ocean" for an explanation of why stocks are getting hit so hard, said Myles Zyblock, chief equity strategist at RBC Capital Markets.

"There's a lot of concern building up about the [bond-swap] deal in Greece and that breaking down," he said. "You've had sentiment very one-sided, and now you have something to think about."

European stocks also closed lower, adding to losses after Reuters reported the Institute of International Finance had warned that a disorderly default could cause more than $1.3 trillion in damage to the euro zone. The institute is a trade group that helped negotiate the terms of Greece's bond swap with its private-sector holders.

Concerns have grown that too few private bondholders will participate in Greece's bond swap, which is to conclude Thursday.

A "hard default," or one in which Greece is not able to restructure its debt, would likely derail Greece's second bailout from the European Union and the International Monetary Fund.

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