US STOCKS-Wall St hurt by auto bailout anxiety, financials

                                
 * Auto bailout faces Senate opponents, uncertainty weighs
                                
 * Financials weigh, JPMorgan falls 10.7 percent
                                
 * Energy shares rally alongside price of oil
                                
 * Dow off 2.2 pct, S&P off 2.9 pct, Nasdaq off 3.7 pct
                                
 * For up-to-the-minute market news, please click on
[STXNEWS/US]
 (Updates to close)
                                
 By Leah Schnurr
                                
 NEW YORK, Dec 11 (Reuters) - U.S. stocks fell on Thursday on
dimming prospects for an automaker bailout, while bleak comments
about the banking sector from JPMorgan's chief executive prompted
investors to sell financial shares.
                                
 Most of the drop came late in the afternoon, but the day was
governed by a steady stream of dismal corporate and economic news,
including initial claims for unemployment benefits hitting a 26-year
high. The pullback was another setback for those Wall Street pundits
who argue that stocks hit their bottom late last month.
                                
 JPMorgan Chase <JPM.N> was the Dow's biggest drag, falling
more than 10 percent. A sell-off in the bank's shares
accelerated after Chief Executive Jamie Dimon told CNBC the year-end
environment was "terrible." The S&P financial sector index <.GSPF>
dropped 8.5 percent. For more details, see [ID:nWEN1731].
                                
 "It reiterates how difficult this market is and how the
real economy is weighing down on financial stocks," said Giri
Cherukuri, head trader at OakBrook Investments in Lisle, Illinois,
referring to Dimon's comments.
                                
 "It's continuing news that the world really hasn't changed. It's
still a tough world out there."
                                
 A rescue for the struggling auto industry seemed dead
unless all sides could come to an agreement. The White House
urged Senate Republicans to back the $14 billion financial
lifeline, but Republicans appeared to have more than enough
votes to stop the bailout with a procedural roadblock.
[ID:nN09294627].
                                
 The Dow Jones industrial average <.DJI> fell 196.33 points,
or 2.24 percent, to 8,565.09. The Standard & Poor's 500 Index <.SPX>
slid 25.65 points, or 2.85 percent, to 873.59. The Nasdaq Composite
Index <.IXIC> lost 57.60 points, or 3.68 percent, to 1,507.88.
                                
 It was only the fourth down day for the S&P 500 since it hit a
noteworthy intraday low on Nov. 21. With the day's decline, the broad
S&P 500 is up nearly 18 percent since tumbling to an 11-year low in
late November. But the S&P remains down about 40 percent for the year
so far.
                                
 After the bell, Dow component Bank of America Corp <BAC.N> said
it plans to cut about 30,000 to 35,000 jobs over the next three
years. Its stock gained 2.5 percent to $15.28 in extended-hours
trading.
                                
 During the regular session, shares of JPMorgan slid 10.7 percent
to $29.94. Earlier, UBS cut its price target on the stock and
earnings estimates for the blue-chip bank holding company, citing a
weak operating environment. It was the third straight day of losses
for the financial sector, the longest losing streak since the bailout
of Citigroup <C.N> late last month.
                                
 Shares of General Motors <GM.N> slid 10.4 percent to $4.12, while
Ford <F.N> lost 10.8 percent to $2.90. Investors fear that without
the government's help, a potential failure or bankruptcy of one of
Detroit's Big Three could send shock waves through the economy and
make the country's unemployment rate even worse.
                                
 The energy sector provided a bright spot, with Chevron <CVX.N>
giving the Dow its biggest boost. Chevron's stock rose 1.3 percent to
$79.46. A report from the International Energy Agency forecast global
oil demand will rebound next year, helping send January crude oil
futures up $4.46 to settle at $47.98 a barrel. [ID:nN11366723].
                                
 In more corporate bad news, shares of Ciena Corp <CIEN.O> shed 20
percent to $6.05 on Nasdaq after the communications equipment maker
reported a surprising quarterly loss and warned of
weaker-than-expected sales. [ID:nN11372132].
                                
 Boeing Co <BA.N> lost 3.4 percent to $40.27 after it pushed
back the schedule for its 787 Dreamliner jet for the fourth time.
                                
 Volume was moderate on the New York Stock Exchange, where about
1.47 billion shares changed hands, below last year's estimated daily
average of 1.90 billion. On the Nasdaq, about 2.05 billion shares
traded, below last year's daily average of 2.17 billion.
                                
 Decliners outnumbered advancers by a ratio of more than 3 to 1 on
the NYSE, while on the Nasdaq, about three stocks fell for every one
that rose.
 (Additional reporting by Deepa Seetharaman; Editing by Jan Paschal)