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Stocks Slump on Questions About Greece

NEW YORK ( TheStreet) -- Stocks fell modestly Friday, dashing a two-day winning streak, amid ongoing uncertainty about how Europe will implement its debt crisis plan and whether Greece will be able to avoid a messy default.

All three major U.S. indices lost ground this week - the first time in more than a month in some cases. The Dow Jones Industrial Average dropped 2%, snapping a five-week winning streak. The blue-chip index pared early losses on Friday after being down by nearly 200 points on Friday, to close off by 61 points, or 0.5%, at 11,983.

All but five of the 30 components of the blue-chip index closed in negative territory with Bank of America (BAC - Get Report), Intel (INTC - Get Report) and General Electric (GE - Get Report) applying the most pressure.

Conglomerates and financial stocks were the weakest sectors on Friday. Basic materials showed the mildest losses. Alcoa (AA - Get Report) and Chevron (CVX) were among the Dow's best performers.

The S&P 500 shed 8 points, or 0.6%, at 1253 and ended the week lower for the first time in five weeks, down by 2.5%. The Nasdaq lost 1.9% on the week and ended Friday's session off by 12 points, or 0.4%, at 2686.

Europe returned to the spotlight after the release of a monthly U.S. jobs report. Stocks eased off of steep losses in the afternoon after a senior Greek lawmaker signaled his support for Greece's government in a confidence vote, according to a Wall Street Journal report.

Investors were disappointed that a meeting of the Group of 20 in Cannes, France failed to show any progress on Europe's debt crisis plan. Italy did agree to let the International Monetary Fund keep an eye on its financial reform efforts, but none of the countries in attendance offered to help support the eurozone bailout fund.

Friday's retreat came after two days of gains. On Thursday, stocks rallied after Greece ditched a controversial referendum vote on its rescue package that could have compromised Europe's plan to contain its debt crisis. Also on Thursday, markets cheered an unexpected cut in interest rates by the European Central Bank.

The market largely shrugged off the unemployment report from the Labor Department given that figures weren't too inspiring. Employers added 80,000 new jobs in October, slightly short of expectations, but unemployment edged down to 9% from 9.1% and gains from August and September were upwardly revised.

"The monthly employment report has largely become an afterthought, not only because European concerns are so dominant but also because labor market developments are unsurprising," writes Dan Greenhaus, strategist with BTIG.

London's FTSE closed lower by 0.3% and Germany's DAX dropped 2.6%. Asian stocks posted gains for the first time in five days. Japan's Nikkei Average finished up 1.86% and Hong Kong's Hang Seng jumped 3.12%.

The euro gave back earlier gains, slipping 0.3% to $1.3784. The dollar index, a measure of the dollar's value against a basket of currencies, moved up 0.3%. The benchmark 10-year Treasury rose 11/32, diluting the yield to 2.040%.

Gold for December delivery closed marginally lower, settling at $1,756.10 an ounce. In other commodities, the December crude oil contract gained 19 cents, or 0.2%, to settle at $94.26 a barrel.

Market breadth was negative with 59% of the 3.9 billion shares that traded on the New York Stock Exchange losing ground while 38% rose. On the Nasdaq, nearly 2 billion stocks changed hands.

MF Global (MFGLQ.PK), which filed for bankruptcy on Monday, may have found the more than $600 million in "missing client money" in a custodial account at JPMorgan Chase (JPM), according to a Bloomberg report that cited two people familiar with the matter. On Friday, former New Jersey governor and chairman of Goldman Sachs, Jon Corzine resigned from his position as chief executive of MF Global.

In other corporate news, daily deals site Groupon (GRPN) opened at $28 a share, jumping 40% from its initial offer price. On Thursday, Groupon priced shares of the offering at $20, exceeding its initial range of $16 to $18 a share. The company netted $700 million in the stock sale for a valuation of nearly $13 billion. The stock closed its first session nearly 31% higher at $26.11.

LinkedIn (LNKD) shares fell 5.9% to $82.37 on Friday. The business social network posted its first quarterly loss since its May initial public offering even as revenue more than doubled during the time period. LinkedIn said it will raise up to $500 million in another stock sale.

Starbucks (SBUX) gained 6.7% to $44.19 after beating Wall Street profit expectations for its fiscal fourth-quarter by a penny on better-than-expected revenue. But the coffee chain gave a fiscal 2012 outlook below analysts' expectations due to expectations of higher commodity costs.

Shares of Alcatel-Lucent (ALU) fell 16.7% to $2.30 after the technology company posted improved third-quarter profit but cut its profit and sales forecasts for 2011 on uncertainty in Europe.

AIG's (AIG) stock shed 2.9% at $23.91 after posting its biggest quarterly loss since 2009, hurt by declining markets and an impairment charge on its plane-leasing subsidiary. AIG also announced a plan to buyback $1 billion worth of common shares.

-- Written by Chao Deng and Melinda Peer in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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