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The Associated Press April 13, 2012, 3:42PM ET

Stocks fall on higher European borrowing costs

Stocks fell Friday and were headed for a losing week after worries about Europe returned.

In afternoon trading, the Dow Jones industrial average was down 77 points at 12,909. It had jumped 181 points the day before.

The broader Standard & Poor's 500 index fell 11 points to 1,376. The Nasdaq composite fell 33 points to 3,023.

The Dow is down 1.2 percent for the week, although it's still up 5.7 percent for the year.

Investors had several reasons to wonder about the prospects for global economic growth. Higher borrowing costs in Europe suggested that the continent's debt problems aren't over. Growth slowed in China. And a closely watched gauge of consumer confidence came in weaker than analysts were expecting.

Friday's drop is "all about Europe," said Peter Cardillo, chief market economist at Rockwell Global Capital. He thinks investors are worried that Europe's economic problems will be bigger than previously expected, although he doesn't share that view. Europe needs to growth to fix its debt problems, but higher borrowing costs could force more cuts in government spending.

"You can't have growth if you have too much austerity. I think that's what the fear is," Cardillo said.

European markets fell broadly. Stock indexes in France and Germany fell more than 2.4 percent. The FTSE 100 index in Britain fell 1 percent.

Worries are concentrated in Spain and Italy, and it showed up in their financial markets on Friday. Spain's main stock index fell 3.6 percent and is now down 15 percent for the year. The yield on its 10-year government bond rose to 5.93 percent, and Italy's rose to 5.52 percent. That's a sign that investors' confidence in those countries' finances slipped and that the countries will have to pay more to borrow money.

New data showed the Chinese economy grew at an 8.1 percent pace in the January-March period, the slowest in almost three years.

Also Friday, the U.S. government reported that inflation was mild in March outside of volatile food and gas prices.

The stock declines were broad. Only consumer staples stocks rose among the 10 market sectors tracked by the S&P 500 index. Those stocks, which include food makers like Kraft, are considered refuges when investors fear a weakening economy or turbulence in financial markets.

Financial stocks declined the most, 2.3 percent. Bank of America Corp. fell 4 percent. Wells Fargo & Co. and JPMorgan Chase & Co. both reported better-than-expected profits, but each fell more than 2 percent as investors focused on comments that said the overhang from bad loans would continue.

Among stocks making big moves:

-- Apple Inc. fell 2.3 percent after reports that a German court ruled against it in a patent fight with Motorola over mobile e-mail technology.

-- Google fell almost 4 percent after the company said it would issue new non-voting stock to shareholders.

-- Coinstar, which runs the Redbox DVD rental kiosks, rose 7.6 percent after it raised its revenue forecast.

-- Dow Chemical rose 2 percent after it raised its quarterly dividend 28 percent. The company said last week it would eliminate 900 jobs and close several plants.

The dollar and Treasury prices rose. Oil dropped 81 cents to $102.83 per barrel.

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