Stocks dive on Europe's debt fears

Trigger-happy investors dumped US stocks on Thursday, scared by the market's sudden fall through a key technical level brought on by more worries about Europe's debt troubles.

The S&P 500 steadily slipped through the morning until it broke through 1,225, when selling picked up in both the futures and cash markets.

Investors have been increasingly focused on Europe, and markets were cautious early as bond yields in Spain and Italy rose to levels viewed as unsustainable.

The Dow Jones industrial average fell 134.71 points, or 1.13 percent, to 11,770.88. The S&P 500 lost 20.73 points, or 1.68 percent, to 1,216.18. The Nasdaq Composite dropped 51.62 points, or 1.96 percent, to 2,587.99.

European shares hit their lowest close in six weeks on concerns a debt crisis in the euro zone could spiral out of control after Spain and France paid a higher price at their debt auctions.

The FTSEurofirst 300 index of top European shares ended 1.3 percent lower at 957.85.

The Nikkei stock average steadied today ahead of data which could show the US economy is weathering Europe's debt storm, but the 8,500 level remained elusive amid fears of what news might come next out of the euro zone. The Nikkei edged up 0.2%to 8,479.63, while the broader Topix index added 0.5% to 727.71.