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Turmoil in Europe pushes stocks lower in US

Political uncertainty in debt-hobbled Europe spread to financial markets Tuesday and pushed stocks lower in Europe and the United States.

The Dow Jones industrial average was down almost 200 points at its low point for the day before recovering most of its loss to finish down 76. It was the average's fifth straight decline.

European indexes closed near their lowest levels in months, and the euro neared a five-month low against the dollar.

Prices plummeted for commodities like oil and copper that depend on the health of the world economy. The turmoil in Europe added to concerns about slower economic growth in China and weaker job creation in the U.S.

Trading throughout the markets is growing more volatile as Europe's debt crisis "accelerates to a point where it's not really controllable with the sorts of Band-Aids they've used," said Daniel Alpert, managing partner at the investment bank Westwood Capital Partners LLC.

Greek voters on Sunday rejected parties that had imposed the deep spending cuts demanded by Greece's bailout lenders. Cuts to pensions and social programs are deepening Greece's crushing recession.

On Tuesday, the left-wing politician struggling to form a new government declared that the country was no longer bound by its promises cut spending sharply in exchange for international bailout loans.

The politician, Alexis Tsipras, also demanded a moratorium on repaying the part of Greece's debt that is "onerous." The main stock index in Greece closed down 3.6 percent after a 7 percent decline the day before.

After a calm finish Monday, benchmark indexes in Germany and France plunged to near their lowest levels this year. Italy's was near its lowest since last November. The main stock index in Britain hit its lowest point this year.

Central banks have injected billions into Europe's financial system, providing temporary support for stock and commodity prices, Alpert said. "If that liquidity is supposed to prime the pump, and the pump doesn't take over, then you've got a problem," he said.

In the U.S., traders dumped risky assets and commodities, partly because of concern that a punishing recession in Europe would hurt economic demand. The price of oil continued its week-long slide. Copper and silver each lost more than 2 percent.

Gold fell $34.60 to a four-month low of $1,604.50. It dipped below $1,600 for the first time since early January. Gold often serves as a safe, stable investment to hold in turbulent times. But in periods of rapid selling, investors sometimes sell gold as a ready source of cash.

The stronger dollar contributed to the fall in commodity prices. Commodities are priced in dollars, so a stronger dollar makes them appear more expensive to traders who use other currencies.

Money flowed into safe investments such as U.S. Treasurys, pushing the yield on the 10-year Treasury note down to 1.85 percent from 1.88 percent late Monday.

A flurry of late-day buying helped the indexes recover from their earlier lows. The Dow closed down 76.44 points, or 0.6 percent, at 12,932.09. The Standard & Poor's 500 index fell 5.86 to 1,363.72. The Nasdaq composite index fell 11.49 to 2,946.27. The S&P had been down almost 22 points and the Nasdaq almost 58.

Markets have been buffeted for three years by shifting perceptions about the gravity of the European debt crisis. At times, many feared a messy string of government defaults would set off a global credit crunch.

Earlier this year, trading had turned relatively placid as policymakers rolled out a host of measures aimed at reassuring investors.

To shore up the region's shaky banks, the European Central Bank injected billions of euros into the financial system. Governments in Italy and Greece fell last year, replaced by technocrats whom international leaders trusted to navigate the crisis. Leaders of indebted nations agreed to tighten their budgets. They slashed pensions and government jobs, raised retirement ages and eliminated social programs.

The measures were aimed at soothing bond investors and preventing nations' borrowing costs from rising. By striking at voters' quality of life, they provoked angry political opposition to the plans.

Opponents of strict austerity say Europe will be unable to emerge from its recession unless governments spend more to boost demand in the economy.

On Sunday, in addition to the election in Greece, French voters elected a president who has spoken out against austerity and promised to cut France's debt load more slowly.

Uncertainty about Europe's path forward is injecting volatility into global markets. As fears about Europe and the U.S. economy reemerged in recent weeks, traders have returned to frenzied buying and selling that recalls last year's record-breaking market swings.

Among U.S. stocks making moves Tuesday:

- Burger chain Wendy's fell 4.1 percent after it cut its forecast and said its first-quarter profit missed Wall Street analysts' expectations.

- Watchmaker Fossil plunged 37.6 percent after saying weak sales in Europe caused its first-quarter revenue to fall far short of expectations. The company also lowered its 2012 earnings forecast.

- Casino operator Wynn Resorts reported a disappointing drop in first-quarter earnings, sending its stock down 4.8 percent.