Europe worries Wall Street again, and stocks fall

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Stocks fell Thursday as renewed concern about Europe outweighed the latest encouraging report about the U.S. job market. The euro dropped to a 15-month low against the dollar, and stocks fell sharply in Italy and Spain.

The Dow Jones industrial average fell 97 points to 12,318 in morning trading. The Standard & Poor’s 500 index fell 7 points to 1,269. The Dow and S&P had started the year with consecutive gains. The Nasdaq was down 6 points to 2,641.

Stocks were down sharply in the European countries with the biggest debt problems. Indexes in Italy, Greece and Spain fell more than 2 percent. Markets in the bigger, more stable economies of Britain, Germany and France fell slightly.

The euro fell to just below $1.28, down more than a penny from Wednesday, to its lowest since September 2010. The euro spent most of last year, even the most uncertain days of the European debt crisis, above $1.30.

In the U.S., Barnes & Noble stock plunged almost 25 percent after the company lowered its profit forecast and said it might spin off its Nook e-reader, which faces tough competition from the Amazon Kindle and the Apple iPad, as a separate business.

Other retailing companies fell, too, after their December sales failed to impress Wall Street.

Upscale stores did well, but others struggled. Macy’s beat expectations for sales and rose 1 percent. But Target, J.C. Penney Co., Sears and Gap were all among the worst performers in the S&P 500, each down more than 3 percent.

The Labor Department reported another drop in the number of people filing for unemployment benefits, and ADP, which processes payroll data, said private employers added 325,000 jobs last month.

The reports appeared to signal further, though not dramatic, improvement in the job market. The government reports Friday on how many jobs the economy created in December and on the unemployment rate, which stands at 8.6 percent.

But investors looked abroad and worried. Italy’s largest bank said Wednesday it was selling stock at a steep discount to raise $9.7 billion to meet requirements that banks keep thicker cushions against losses.

In other U.S. corporate news:

— Constellation Brands Inc., which makes Robert Mondavi wine and Svedka vodka, fell 6.1 percent after its quarterly profit dropped 25 percent. North American wine and beer sales were weaker.

— Tesoro Corp., a Texas oil refiner, plunged 7.9 percent. It said it lost money in the final three months of 2011 because the rising price of crude oil made refining more expensive at the same time gasoline prices were falling.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.8 percent. China’s benchmark Shanghai Composite Index lost 1 percent to its lowest level in almost three years.