US stocks fall more than 1% in a truncated session

US stocks fell more than one percent in a truncated session on Friday as a possible debt default by a Dubai state-owned conglomerate led to fresh concerns about the global financial system.

The sell-off was broad, with selling concentrated mainly in the financial and commodity-linked sectors as investors trimmed positions in areas of the market most sensitive to economic uncertainty.

That hit stocks like aluminum producer Alcoa Inc, down 2.6 percent, and Bank of America, down 3 percent.

But after a slide of more than 2 percent at the open, the flight to less risky assets seemed to be subsiding, helping the major US stock indexes ease back up off their lows. The U.S. dollar, which had jumped sharply as investors looked for a safe haven, pared gains and commodity prices stabilized.

The news out of the Middle East coincided with the desire by many investors to lock in 20 percent year-to-date gains in the S&P 500 after a terrible year in 2008.

The Dow Jones industrial average dropped 154.48 points, or 1.48 percent, to end at 10,309.92. The Standard & Poor's 500 Index fell 19.14 points, or 1.72 percent, to 1,091.49. The Nasdaq Composite Index lost 37.61 points, or 1.73 percent, to 2,138.44.

For the week, the Dow dipped 0.1 percent, while the S&P 500 edged up 0.01 percent and the Nasdaq slipped 0.4 percent.

Volume was light on the day after Thanksgiving. The US stock market shut on Friday at 1 p.m. (1800 GMT), which was three hours shy of its normal closing bell, but the number of declining stocks still towered over those advancing.

On Wednesday, Dubai said it would ask creditors of state-owned Dubai World and Nakheel, the builder of its palm-shaped islands, for a standstill agreement as a first step toward restructuring billions of dollars of debt.

On Thursday, U.S. financial markets were closed for the Thanksgiving holiday. (Reuters)

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