Wall Street falls on Europe debt worries; Europe shares pushed to 7-mth closing low

The major stock indexes finished the day's volatile session from 1 percent to 2 percent lower.

The weekly declines for the Dow and the S&P 500 were the steepest since March 2009 when the market hit a 12-year low. The Nasdaq had its largest weekly drop since November 2008.

Wall Street's "fear gauge" -- the CBOE volatility index .VIX -- rose 25 percent, while the volume of shares traded was the second highest this year.

"Europe's debt crisis is a big issue that won't go away any time soon. But with what happened yesterday, investors have grown more concerned that the environment just isn't safe, period," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

Governments around the world tried to calm markets after fears about Greece's debt crisis spread further around the globe. The cost of protecting European bank debt against default reached levels not seen since the height of 2009's economic crisis.

The Dow Jones industrial average .DJI fell 139.89 points, or 1.33 percent, to 10,380.43. The Standard & Poor's 500 Index .SPX was down 17.27 points, or 1.53 percent, at 1,110.88. The Nasdaq Composite Index .IXIC finished 54 points lower, or 2.33 percent, at 2,265.64.

For the week, the Dow was off 5.7 percent, the S&P 500 was down 6.4 percent and the Nasdaq dipped 8 percent.

The Nasdaq fared worse as technology stocks led the broader market lower. Apple Inc (AAPL.O) ended down 4.2 percent to $235.86 and Intel Corp (INTC.O) dipped 0.9 percent to $21.31.

Thursday's sell-off drove the Dow average down nearly 1,000 points -- its biggest-ever intraday point drop.
The fall may have been exacerbated by erroneous trades that showed some shares briefly fell to nearly zero in value. The Nasdaq and other exchanges said they would cancel erroneous trades.

The US Securities and Exchange Commission held urgent discussions with other regulators to try to shed light on the causes of Thursday's plunge.

Trades that took place during the worst of Thursday's drop will be cancelled for more than 250 stocks, Nasdaq OMX said, adding to a long list of "busted" transactions on NYSE Euronext's Arca and other exchanges and trading venues.

The uncertainty around the cancellations could have heightened the day's price swings as investors examined their holdings.

"It could add to volatility because you have to unwind all of that," said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia.

The volatility index ended up 24.9 percent at 40.95 after rising as high as 42.15 earlier in the day, its highest since April 2009.

Stocks gained some ground after data showed US non-farm payrolls grew at the fastest pace in four years in April as private sector employers ramped up hiring.

About 17.6 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, compared with last year's estimated daily average of 9.65 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 22 to 9, while on the Nasdaq, about four stocks fell for every one that rose.

European shares ended at a 7-month closing low, suffering their biggest weekly fall since November 2008.

The pan-European FTSEurofirst 300 index of top shares closed down 3.9 percent at 967.42 points after touching an 8-month intraday low earlier in the session and ended the week down 8.9 percent.

Spain's IBEX fell 3.3 percent, Portugal's PSI 20 was down 2.9 percent and Italy's benchmark dropped 3.3 percent.

Japan's Nikkei average fell more than 4 percent to a two-month low before pulling back slightly, caught up in a global equity sell-off triggered by Europe's debt crisis.

The benchmark Nikkei fell 3.1 percent or 331.10 points to 10,364.59, and has lost 6.3 percent in a holiday-shortened two-day trading week.