YAHOO [BRIEFING.COM]: Stocks slumped to a 2.7% loss on Friday. Tenuous fiscal and financial conditions in Europe continue to be blamed.

Weakness among Europe's major bourses weighed on sentiment even before U.S. markets opened on Friday. In turn, stocks slid at the start of the session, extending the prior session's slide.

From the start, selling interest was broad based. Pressure intensified in response to headlines that suggested Germany is planning to support certain banks if Greece defaults on its debt. The headline was circulated before trade in Europe closed; it led Germany's DAX to drop to a 4% loss. The euro also sold off in response to the headline. It sank to a 1.6% loss, as of the closing bell.

Weakness in the euro fueled increased demand for the dollar, such that the Dollar Index rallied 1.2% to a five-month high above its 200-day average.

Skittishness among investors stoked volatility, such that the Volatility Index, often euphemistically labeled the Fear Gauge, climbed more than 16% back toward 40. The VIX hasn't been that high since concerns about Europe's stability had last escalated in mid-August.

In response to broad market weakness and heightened volatility, Treasuries scored strong gains. In fact, buyers drove the yield on the benchmark 10-year Note to a new record low near 1.90% after it had been near 2.30% only a couple of weeks ago.

Friday's drop left the S&P 500 to log its fifth loss in six sessions. It also caused the stock market settle the holiday-shortened week 1.7% lower than where it had started, giving stocks their sixth weekly decline in seven weeks. The downtrend has left the S&P 500 almost 16% below its 2011 high, but more than 4% above its 2011 low.

Trade in crude oil, which shed 2% to close at $87.24 per barrel, was largely driven by economic concerns, as well as strength in the dollar. Futures traded to their lowest levels, at $85.64, in mid-morning trade, but managed to bounce close to two points off those lows heading into the close. Natural gas prices sold off in mid-morning trade, moving back to levels seen in overnight trade. On the session prices shed 1.6% to finish at $3.92 per MMBtu.

It was a choppy session for gold prices, which gained 0.2% to finish at $1859.50 per ounce. Despite numerous economic concerns, strength in the dollar kept a lid on any potential move to the upside. Silver futures closed lower by 2.1% to $41.62 per ounce.

Advancing Sectors: (None)
Declining Sectors: Energy -3.3%, Financials -3.2%, Materials -3.2%, Health Care -2.9%, Consumer Discretionary -2.7%, Industrials -2.7%, Tech -2.3%, Consumer Staples -2.2%, Utilities -2.0%, Telecom -1.2%DJ30 -303.68 NASDAQ -61.15 NQ100 -2.3% R2K -3.0% SP400 -2.8% SP500 -31.67 NASDAQ Adv/Vol/Dec 412/2.05 bln/2142 NYSE Adv/Vol/Dec 450/1.22 bln/2577