Wall St drops on weak German data, leaders meet

NEW YORK: US stocks fell in early trading on Tuesday after three days of gains as data showed sluggish German growth hobbled the euro zone, rekindling fears of a stagnant global economy.

Investors focused on a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy to discuss measures to contain Europe's fiscal crisis. A joint news conference was set for noon EDT (1600 GMT).

The meeting could get more attention as data showed Germany's gross domestic product expanded just 0.1 percent from April to June versus the previous quarter, missing forecasts and knocking regional growth figures below expectations. And "Investors are relying on a strong Germany to lead Europe out of the financial mess it's in," said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.

"The data puts more weight on the double-dip camp," he said, referring to traders who expect the global economy to slip again into recession.

A better-than-forecast industrial output report and Fitch's affirmation of the US credit rating with a stable outlook gave initial support to stocks, but indexes were soon near session lows.

The Dow Jones industrial average lost 109.47 points, or 0.95 percent, to 11,373.43. The S&P 500 Index fell 13.98 points, or 1.16 percent, to 1,190.51. The Nasdaq Composite dropped 31.93 points, or 1.25 percent, to 2,523.27.

In other US data, July housing starts fell, reflecting a sector continuing to bounce along the bottom.

Copyright Reuters, 2011