Global shares dive on Greece impasse

US stocks fell on Monday as investors dealt with the one-two punch of worsening political upheaval in the euro zone and the possibility that China's economy may be softening more than previously thought.

The Dow Jones industrial average dropped 125.25 points, or 0.98 percent, to 12,695.35 at the close. The Standard & Poor's 500 Index lost 15.04 points, or 1.11 percent, to 1,338.35. The Nasdaq Composite Index fell 31.24 points, or 1.06 percent, to 2,902.58.

European shares sank to a four and a half month closing low in a broad-based sell-off as political deadlock in Greece raised the prospect of the country's exit from the euro zone, while concerns over China's economy also undermined sentiment.

The FTSEurofirst 300 index of top European shares ended down 1.8 percent at 1,004.20, its lowest close since Dec. 30. The Euro STOXX 50 volatility index, Europe's main gauge of investor anxiety, meanwhile, jumped almost 12 percent.

In Asia, Japan's Nikkei share average inched higher to end a three-day losing streak as China's monetary easing countered unease ahead of Greece's last-ditch attempt to form a coalition government later in the day.

The Nikkei closed 0.2 percent higher at 8,973.84, holding below the psychological key 9,000-mark but above technical support at 8,945, the 61.8 percent retracement of its rally from November to March.The broader Topix index slipped 0.2 percent to 756.68.