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Wall Street tumbles on stalled Greek debt talks

NEW YORK — U.S. stocks fell on Monday after Greece's efforts to reach a debt restructuring with creditors stalled and European leaders struggled to change the market's focus to a push for economic growth on the continent.

Traders sold bank stocks as Germany sought to tone down reports it was pushing for Greece to give up control over its budget policy to European institutions. Greece was unlikely to accept that scenario, presenting another obstacle to a second bailout package for Athens.

The issues with Greece added to uncertainty surrounding a summit where European Union leaders will sign off on a permanent rescue fund for the euro zone.

"There was widespread belief that the private sector participation in the Greek debt negotiations would have been completed over the weekend," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "That was the first disappointment."

He said Berlin's requirements from Athens are "a non-starter politically," and the market sees that as yet another hurdle before the next disbursement of cash to Greece.

The financial sector, down 1.5 percent, was the biggest drag on the S&P 500. Bank of America fell 2.2 percent to $7.05.

The Dow Jones industrial average fell 88.44 points, or 0.70 percent, to 12,572.02. The S&P 500 Index dropped 9.18 points, or 0.70 percent, to 1,307.15. The Nasdaq Composite Index slipped 9.47 points, or 0.34 percent, to 2,807.08.

Major indexes were earlier down more than 1 percent.

Apple shares helped cap losses on the Nasdaq after Morgan Stanley said the iPhone maker could add China Telecom and China Mobile as distributors over the next year. Apple rose 1.1 percent to $452.

Energy stocks were lower but pared losses as crude futures briefly turned positive. Exxon Mobil fell 1.2 percent to $84.84.

Swiss engineering group ABB agreed to buy U.S. electrical components maker Thomas & Betts Corp for $3.9 billion in cash, sending shares of the company up 22.3 percent to $71.03.

U.S. consumer spending was flat in December as households took advantage of the largest rise in income in nine months to boost their savings, setting the tone for a slowdown in demand early in 2012.