US stocks dive on Europe fears

The Dow Jones Industrial Average fell 107.62 points (0.85 percent) to 12,545.58 in the first half-hour of trading.

The broader S&P 500 shed 14.47 points (1.08 percent) to stand at 1,329.33, while the tech-heavy Nasdaq Composite dropped 22.99 points (0.80 percent) to 2,836.86.

Eurozone finance ministers were meeting on Monday to discuss the continent\'s broadening problems, as Italy faced higher borrowing costs, fueling concerns that it could face a Greek-style debt crisis.

Italian stocks fell more than three percent on Monday and the country\'s financial regulator imposed tougher rules on short-selling in a bid to prevent speculators from targeting the eurozone\'s third-largest economy.

"With inflammatory reports this morning suggesting EU leaders are holding emergency discussions about Italy at the same time they are trying to figure out a second bailout plan for Greece, market participants are in a sell first, ask questions later frame of mind," said Patrick O\'Hare of Briefing.com.

Investors were also not assured by news from Washington, where high-level talks on raising the debt ceiling and averting a default apparently made no progress over the weekend.

Against that bleak backdrop, US companies are set to begin reporting their second-quarter results this week, with aluminum giant Alcoa due to report its earnings after the closing bell on Monday.

Alcoa\'s stock was down 2.4 percent in early trading. Financial stocks also took a beating, with Bank of America down 2.3 percent and JPMorgan Chase down 2.2 percent.

Shares of News Corp. plummeted 6.0 percent on the Nasdaq as Rupert Murdoch\'s media empire faced increasing scrutiny over a phone-hacking scandal in Britain, imperiling its bid to take full control of satellite broadcaster BSkyB.

Bond prices rose as investors flocked to US government debt, traditionally seen as a safe-haven investment.

The yield on the 10-year US Treasury note dropped to 2.96 percent from 3.02 percent late Friday, while that on the 30-year bond fell to 4.24 percent from 4.28 percent.

Bond prices and yields move in opposite directions.

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