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Stocks fall on broad concerns about Europe

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By The Associated Press
Monday, March 25, 2013, 5:06 p.m.
 

Stocks reversed an early rise on Wall Street on Monday as traders returned to worrying about the European economy.

Optimism about a deal to prevent financial collapse in Cyprus had briefly pushed the Standard & Poor's 500 index to within a quarter-point of its record close, but stocks soon turned negative.

The S&P 500 and Nasdaq composite index both closed down 0.3 percent. The Dow Jones industrial average slipped 0.4 percent.

Stocks turned negative about an hour into the trading day Monday as the initial euphoria about Cyprus' deal to secure 10 billion euros in emergency funding was overshadowed by renewed concerns about the European economy.

The fear intensified when a top European official indicated that investors in struggling banks may be forced to take losses — an element of the Cyprus agreement that had previously been seen as unique to that country.

All 10 industry groups in the S&P 500 closed lower, with industrial and materials companies posting the biggest losses. Network technology company VMware Inc. dove when the website Business Insider reported that PayPal and eBay will remove its software from 80,000 servers. The stock fell $3.65, or 4.6 percent, to $76.50.

Among the biggest drags on the S&P 500 index were software maker Red Hat Inc., eBay and Textron Inc., an aerospace and defense contractor.

Europe still needs a long-term economic fix, said David Kelly, chief global strategist at J.P. Morgan Funds. Business activity in the 17 nations using the euro has declined continually since September 2011, according to research by Markit, a data provider.

The region's economy shrank 0.6 percent in 2012, according official government statistics.

The S&P 500 closed down five points at 1,551.69. The loss was offset in part by big jumps for Apollo Group Inc. and McGraw-Hill Cos.

The Dow fell 64 points to 14,447.75. The Nasdaq dropped nine to 3,235.30.

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