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US stocks fall on fiscal cliff worries

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US stocks have closed lower as fiscal cliff worries overshadow encouraging US economic data and investors shrug off Greece’s revised bailout deal.

The Dow Jones Industrial Average shed 89.24 points (0.69 per cent) to close at 12,878.13 on Tuesday.

The broad-market S&P 500 lost 7.35 points (0.52 per cent) to close at 1,398.94, while the Nasdaq Composite slid 8.99 (0.30 per cent) to 2,967.79.

Investors remained focused on Washington where Democratic Senator Harry Reid said little progress had been made in budget negotiations, Briefing.com analysts said.

“After the Senate majority leader’s comments, the S&P 500 fell to session lows from its flat line,” and declined further in a final round of selling pressure.

European markets closed higher after the Greek deal, which allows Athens to trim its debt load through bond buybacks and reduced rates, and promises new rescue loan instalments of $US43.7 billion euros ($A41.96 billion) to the end of March.

Critics said Greece’s creditors, the European Union and the International Monetary Fund, had again “kicked the can down the road” with the new arrangement.

“We think that Greece will eventually need a much larger debt relief, but any agreement on this is unlikely to happen before German elections,” said Tullia Bucco of UniCredit Research.

Trade was heavy in food manufacturer Ralcorp Holdings, which surged 26.4 per cent after ConAgra Foods set a deal to buy it for $US6.8 billion ($A6.53 billion), including assuming Ralcorp debt. ConAgra gained 4.7 per cent.

The Dow’s biggest laggards were Hewlett-Packard, down 3.1 per cent, American Express, off almost two per cent and United Health, 1.6 per cent.

Intel led the nine gainers, up 0.6 per cent.

Casino operator Las Vegas Sands jumped 5.2 per cent after it announced a special dividend to be paid before year-end, aiming to avoid higher dividend taxes that will likely result from deficit-slashing negotiations under way in Washington.

On the Nasdaq, Research in Motion, the BlackBerry maker, dived 10.4 per cent despite an upgrade from CIBC World Markets.

Apple shares fell 0.8 per cent after Monday’s 3.2 per cent gain.

Bond prices rose slightly. The 10-year US Treasury yield dropped to 1.65 per cent from 1.66 per cent on Monday, and the 30-year fell to 2.79 per cent from 2.80 per cent.

Bond prices and yields move inversely.