Stocks were headed sharply lower as disappointment regarding last week’s dismal June jobs report lingered, compounding concerns about the global economic recovery.

The Dow Jones Industrial Average was down by 152.7 points, or 1.2%, at 12,504. The  was lower by 22.8 points, or 1.7%, at 1,320, and the was off by 54.1 points, or 1.8%, at 2805.

Stocks fell Friday after a disappointing June jobs report left investors feeling less confident in the economic recovery.

As European leaders meet to discuss additional financial support for Greece, market watchers were already eyeing Italy and Spain as potential euro-zone countries in need bailout plans. According to a Bloomberg report that cited an article in the German newspaper Die Welt, the eurozone’s bailout fund may have to be doubled to 1.5 trillion-euro, or $2.1 trillion, to support Italy. Italian and Spanish bond yields rose to the highest levels since the creation of the euro on Monday, according to a Wall Street Journal report.

Data released Saturday showed inflation in China rose to a three-year high in June despite repeated attempts by the country’s central bank to curb it.

The FTSE in London was shedding 1%, and the DAX in Frankfurt was declining by 2.5%. Hong Kong’s Hang Seng sank 1.7%, and Japan’s Nikkei lost 0.7%.

The euro was trading 1.7% lower against the greenback, which was trading 1.1% higher against a basket of currencies, according to the dollar index.
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Speaking at a press conference in Washington, President Obama vowed to meet with congressional leaders every day to resolve deficit-reduction issues in order to ensure that the U.S.’s credit rating will not be damaged.  The U.S. must raise its debt ceiling by Aug. 2 to avoid defaulting on some of its financial obligations.

Last Friday’s news that the U.S. economy only added 18,000 jobs in June has intensified Republicans’ objections to Democrats’ insistence on higher taxes for high-income-earners since solid job growth is a crucial component to a self-sustaining  recovery. Democrats argue that steep spending cuts to government programs will harm those who have struggled the most during the economic downturn.

”The economy is in a catch-22,” said Paul Nolte, managing director of Dearborn Partners, in a recent note. “Companies are not sure modestly higher demand will persist, so why hire additional staff – and existing staff are concerned their job may not be around too much longer. So both play a cautious game, spending only what is needed. Add to the mix worries over U.S. default, additional debt problems in Europe and it is little wonder investors are unwilling to be aggressive buyers (or sellers) in the market today.”

Financial stocks were among the session’s biggest laggards. Analysts expect big U.S. banks to post declines in sales and trading revenues, according to a New York Times report that quoted Credit Suisse research projecting an average drop of 25% to core trading revenues from the first quarter.

was the only components trading in positive territory.

Market breadth was decidedly negative with 84% of the 1.3 billion shares trading on the New York Stock Exchange posting losses while only 14% were rising. There were 723 million shares changing hands on the Nasdaq.

Chinese chemicals company Sinochem is in advanced discussions with Monsanto to “deepen their ties significantly,” according to The Wall Street Journal.

Shares of (SIRI) were gaining 0.4% to $2.23 on news that the satellite radio company will be added to the Nasdaq-100 Index effective July 15. The company’s common shares will also be included in the  exchange-traded fund.

Shares of Arch Chemicals were surging 11.2% to $46.90 on news that Swiss company  agreed to buy it for $1.2 billion in cash, creating the world’s largest microbial control business.

Australian mining company Macarthur Coal said it received a takeover proposal from Peabody Energy and valued at roughly $5 billion. Macarthur is the world’s largest producer of pulverized coal product that is used to make steel.

Car rental company  is extending its more than $2 billion offer for rival Dollar Thrifty (DTG) to Aug. 5, from its initially announced expiration date of July 8. The bid consists of $57.60 in cash and 0.8546 a share of Hertz common stock. Hertz’s stock was trading 3.4% lower at $15.71 and shares of Dollar Thrifty were shedding 0.6% at $73.46.

Dunkin Brand said it plans to sell 22.25 million common shares at an estimated price of $16 to $18 a share in its initial public offering, according to a Securities and Exchange Commission filing. The operator of the Dunkin’ Donuts coffee chain has applied to have its shares listed on the Nasdaq under symbol “DNKN.”

Earnings season unofficially kicks off after the close of trading with second-quarter results from Alcoa The market expects the aluminum producer to post a profit of 35 cents a share.

The August crude oil contract was shedding $1.59 to trade at $94.61 a barrel. Gold for August delivery was up by $4.30 at $1,545.90 an ounce.

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