US STOCKS-Wall St slides as fiscal deal unlikely before 2013

Fri Dec 21, 2012 11:54am EST
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* Failure of Boehner's bill suggests compromise difficult

* Banking shares tumble, Citigroup and BofA shares drop

* Research In Motion shares slide 17 percent

* Dow down 1.4 pct, S&P 500 off 1.5 pct, Nasdaq off 1.5 pct

By Leah Schnurr

NEW YORK, Dec 21 (Reuters) - U.S stocks lost more than 1 percent on Friday after a Republican proposal for averting the "fiscal cliff" failed to pass, diminishing hopes that a deal would be reached soon in Washington.

Trading is expected to be volatile as investors view a fiscal agreement between the White House and Republicans before the end of the year as increasingly unlikely. Lower volume heading into next week's Christmas holiday could increase volatility. The CBOE Volatility Index, or VIX, was up 10 percent.

Late on Thursday, Republican House Speaker John Boehner conceded there were insufficient votes from his party to pass a tax bill, dubbed "Plan B," to help avert the so-called fiscal cliff - $600 billion of tax hikes and spending cuts due to start in January. The fear is that failure to come up with a solution to avoid the cliff could tip the U.S. economy into recession.

Plan B had called for tax increases on those who earn $1 million or more a year, and the bill's failure suggested it would be difficult to get Republican support for the more expansive tax increases that Obama has urged, making it less likely an agreement will be reached between the White House and Republicans before the end of the year.   Continued...