US, global stock markets down as Shanghai index tumbles, Greece deadline looms


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NEW YORK — U.S. stocks were modestly lower in afternoon trading Thursday, following a steep sell-off in the Chinese stock market and the approaching deadline for cash-starved Greece to make a debt payment.

KEEPING SCORE: The Dow Jones industrial average lost 66 points, or 0.4 percent, to 18,097 as of 2:20 p.m. Eastern. The Standard & Poor's 500 index lost six points, or 0.3 percent, to 2,117 and the Nasdaq composite lost 15 points, or 0.3 percent, to 5,091.

MORE M&A: Chipmakers Avago Technologies and Broadcom agreed to merge in a $37 billion deal. Avago was down 91 cents, or 1 percent, to $140.58. Broadcom fell $1.44, or 3 percent, to $55.71. Both stocks had jumped sharply Wednesday -- Broadcom by 22 percent and Avago by 8 percent -- on rumors those companies were in merger talks.

CHINA DIVE: The Shanghai Composite sank 6.5 percent in another volatile move. Stock market commentator Hexun attributed the fall to several factors including brokerages tightening margin lending, selling by speculators and a Chinese sovereign wealth fund selling shares in two state banks.

Despite a deepening economic slowdown, the index has gained 40 percent in the past three months alone. Chinese leaders have tried to tap brakes on the stock market boom, fearing it could run out of control and disrupt economic reform plans.

GREECE FACTOR: Traders continue to get mixed messages about the progress of talks between Greece and its creditors. Greece said Wednesday it expected to reach a deal to get more bailout loans in time for it to make a key debt repayment on June 5. But its creditors, however, were quick to temper expectations.

Greece says it aims to clinch a deal with its creditors by Sunday, which would allow it to receive the desperately needed final installment of its international bailout plan and avoid a default.

Greek stocks fell 1.7 percent. Germany's DAX lost 0.8 percent, France's CAC-40 lost 0.9 percent and the U.K.'s FTSE 100 index rose 0.1 percent.

Greece has given investors a headache for years now, and many are skeptical that this round of talks will resolve any of the country's debt issues.

"They're likely to kick the can down the road as they have been," said Scott Wren, a market strategist with Wells Fargo. "At this point, I think we're likely looking at Greece leaving the eurozone down the road."

MEANDERING: There's been a lot of "wait and see" for investors this month. Along with Greece's debt problems, Wall Street is looking for insight into when the Federal Reserve might start raising interest rates. The Fed is expected to increase rates as early as September, but the bank's policymakers say any increase will depend on how the U.S. economy performs.

MARKUPS: Abercrombie & Fitch rose $2.31, or 12 percent, to $21.96 after the company said it saw sales improve last quarter. The teen apparel retailer has been under pressure in recent years to revamp its image.

ENERGY: Benchmark U.S. crude fell 27 cents to $57.24 a barrel on the New York Mercantile Exchange. Oil and gas stocks fell along with the price of oil. Chesapeake Energy, Transocean and Pioneer Natural Resources each lost 3 percent or more.

BONDS, CURRENCIES: U.S. government bond prices rose slightly. The yield on the 10-year Treasury note slipped to 2.13 percent from 2.14 percent. The euro rose to $1.0945 from $1.0899. The dollar was little changed against the Japanese currency at 123.75 yen.

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