Stocks slip on euro zone debt skepticism

Global equity markets and the euro slid on Monday as investors, unnerved by an Italian bond auction, doubted the ability of new governments in Italy and Greece to resolve the long-festering debt crisis in Europe.

US stocks fell as rising bond yields in Italy and other euro-zone countries reminded investors that despite changes in governments, the region's debt crisis could still spin out of control.

The Dow Jones industrial average dropped 74.70 points, or 0.61 percent, at 12,078.98. The Standard & Poor's 500 Index fell 12.07 points, or 0.96 percent, at 1,251.78. The Nasdaq Composite Index lost 21.53 points, or 0.80 percent, at 2,657.22.

European shares extended losses after an auction of up to 3 billion euros ($4.1 billion) of five-year Italian bonds failed to provide relief to investors during a choppy session. Shares briefly recovered after the auction, but the record yield brought jitters back in the market, traders said.

The FTSEurofirst 300 index of top European shares was down 1.1 percent at 973.14 points. The STOXX Europe 600 Financial Services index lost 2 percent.

In Asia, the Nikkei average gained more than 1%, helped by an easing of fears about Europe's debt crisis, but investors were reluctant to push the market higher ahead of the Italian debt auction.

The Nikkei average closed up 1.1% at 8,603.70, after falling 3.3% last week. The broader Topix index gained 0.9%to 735.85.