Global stocks drop on worries about Europe

Stocks fell on Wednesday after a hefty year-end rally and the S&P 500 erased gains for the year as investors shifted focus to what is expected to be a difficult start to 2012.

The Dow Jones industrial average was down 129.91 points, or 1.06 percent, at 12,161.44. The Standard & Poor's 500 Index was down 14.43 points, or 1.14 percent, at 1,251.00. The Nasdaq Composite Index was down 30.51 points, or 1.16 percent, at 2,594.66.

European shares tracked Wall Street into the red in light trade, with auto makers the steepest fallers as investors cashed in on a recent rally.

The FTSEurofirst 300 index, which had risen 3.5 percent in the week to Christmas, closed 0.7 percent lower at 983.32 points, having traded less than 40 percent of its 90-day volume average.

In Asia, the Nikkei share average edged down in thin trade ahead of a closely watched Italian bond sale this week, while Tokyo Electric Power Co plunged after Japan's trade minister urged the utility to consider temporarily going under state control.

The Nikkei ended down 0.2 percent to 8,423.62, stuck between its 25-day moving average at 8,464.46 and the 50 percent retracement of its rally from late November to early December at 8,431.