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NEW YORK (

TheStreet

) -- Stocks finished modestly lower on Tuesday, extending the steep losses suffered on Monday, as concerns about the debt crisis in Europe persisted.

The

Dow Jones Industrial Average

dropped 25 points, or 0.2%, to close at 12,356. Throughout the session, the index fluctuated between the positive and negative territory as strength in energy was offset by weakness in tech and financials. The blue-chip index swung between a wide range of session of 12,422 and 12,350 during the session. The

S&P 500

closed lower by 1 or 0.1% at 1316, while the

Nasdaq Composite

slipped 13 points, or 0.5%, at 2746.

Investors continued to eye

Greece, Spain and Italy in the wake of recent warnings from ratings agencies about the countries' debt levels. On Tuesday,

Moody's Investor Service

(MCO) - Get Moody's Corporation (MCO) Report

chimed in, warning that a restructuring in Greece's debt would be considered a default and hurt its ratings. It further placed 14 U.K. banks under review for a possible downgrade.

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The FTSE in London rose 0.4% and the DAX in Frankfurt was also closed ahead by 0.4%. Hong Kong's Hang Seng inched 0.09% higher and Japan's Nikkei gained 0.2%.

Goldman Sachs

raised its 2011 forecast for Brent crude prices to $120 a barrel from $105 a barrel and its 2012 forecast to $140 from $120, citing a depletion in OPEC spare oil output capacity and global stocks due to an increase in fuel demand. In April, Goldman warned of near-term pressures in commodities, after a sharp run up in prices of oil and base metals.

Morgan Stanley

also raised its Brent crude forecast, citing stronger demand and a shortfall in Libyan production.

A weaker greenback also helped pushing oil prices higher as the dollar index declined by 0.3%. The July crude oil contract added $1.89 to settle at $99.59 a barrel. Gold for June delivery gained $7.90 to settle at $1,523.30 an ounce.

Energy and basic materials stocks were the strongest performers during the session.

Within the Dow,

Chevron

(CVX) - Get Chevron Corporation Report

,

Exxon Mobil

(XOM) - Get Exxon Mobil Corporation Report

and

Alcoa

(AA) - Get Alcoa Corp. Report

were best performers, while

General Electric

(GE) - Get General Electric Company (GE) Report

,

Intel

(INTC) - Get Intel Corporation (INTC) Report

and

American Express

(AXP) - Get American Express Company Report

were the biggest laggards.

"We're seeing a market that's trying to keep its head above water," said Peter Cardillo, chief market economist at Avalon Partners. "New-home sales were better-than-expected, but the overall pace of sales remain weak so that really hasn't given investors much of a reason to come back into stocks."

"The market is trying to regain some of its footing after several days of weakness," he added.

New-home sales rose 7.3% in April to a seasonally adjusted annual rate of 323,000, from March's level of 301,000. Sales came in slightly above economists' expectations for sales of 300,000, according to

Briefing.com

. However, April's new-home sales figure remained 23.1% below year-earlier levels.

An

ash cloud from the eruption of Iceland's Grimsvotn volcano grounded more than 200 flights in Europe and forced President Obama to shorten his trip to Ireland.

Shares of

Autozone

(AZO) - Get AutoZone, Inc. Report

jumped nearly 6% to $293.30 after the

auto parts retailer beat analysts' estimates with a third-quarter profit of $5.29 a share.

Shares of

GT Solar International

( SOLR) gained 3.2% to $12 after

surpassing Wall Street's estimates and lifting its forecast for fiscal 2012.

Canadian company

Valeant Pharmaceuticals

(VRX)

agreed to buy Lithuania-based

AB Sanitas

for roughly €314 million ($442.1 million) in cash, and assume about €50 million of debt. Valeant's stock rose 2.7% to $49.53.

American International Group's

(AIG) - Get American International Group, Inc. Report

$9 billion stock offering is expected to price late Tuesday. The stock slipped 1.7% to $29.46.

El Paso

( EP),

Sprint Nextel

(S) - Get SENTINELONE, INC. Report

,

Devry

(DV)

and

Salesforce.com

(CRM) - Get salesforce.com, inc. Report

were other gainers on the S&P 500.

Market breadth was split evenly with 48% of the stocks listed on the NYSE rising and 49% were declining.

The benchmark 10-year Treasury was up 4/32 with a yield of 3.112%.

.

--Written by Melinda Peer and Shanthi Bharatwaj in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.