US STOCKS-Bank uncertainty knocks Wall St; Citi hammered

                                
 * Bank nationalization fear grips market
                                
 * Bank of America, Citigroup lead financial sell-off
                                
 * Dow, S&P 500 off 1 pct; Nasdaq off 0.2 pct
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
 (Updates to late morning)
                                
 By Ellis Mnyandu
                                
 NEW YORK, Feb 20 (Reuters) - U.S. stocks fell on Friday,
pinning the Dow to levels not seen for more than six years, as
investors worried that a financial sector rescue might involve
nationalization of major banks, wiping out shareholders.
                                
 The mounting fear sent investors scurrying to the relative
safety of U.S. government bonds <US10YT=RR> and gold <XAU=>,
which rose briefly above $1,000 an ounce.
                                
 Shares of Bank of America <BAC.N> fell more than 14 percent
to $3.37, while Citigroup <C.N> slid more than 20 percent to
$2.01. Citi swung briefly below the $2 mark and contributed to
a 4.8 percent drop in the KBW Banks index <.BKX>.
                                
 "The sell-off stems from concern over financials,
especially Citi and BAC, and concern that they will be
nationalized," said Ryan Larson, head of equity trading at
Voyageur Asset Management in Chicago. "The tone is negative and
financials are bringing down the wider market but we are seeing
some buying going on."
                                
 The Dow Jones industrial average <.DJI> shed 76.30 points,
or 1.02 percent, to 7,389.65. The Standard & Poor's 500 Index
<.SPX> lost 8.16 points, or 1.05 percent, to 770.78. The Nasdaq
Composite Index <.IXIC> dipped 2.90 points, or 0.20 percent, to
1,439.92.
                                
 Even so, bargain hunting in the technology sector lifted
shares of semiconductor companies, which helped limit the
Nasdaq's losses. Intel Corp <INTC.O> was among the Nasdaq's
standouts, up 1.2 percent at $12.83, along with Intuit Inc
<INTU.O> which posted a smaller-than-expected drop in quarterly
profit. Its stock jumped more than 10 percent to $23.44
                                
 A broker upgrade on AT&T <T.N> and Verizon <VZ.N> lifted
telecoms, making the sector a top Dow boost.
                                
 But even with those positive spurs, investors still took
flight from other key sectors, including energy, amid a drop in
oil prices, and in the shares of big manufacturers.
                                
 Chevron <CVX.N> declined 2.4 percent to $65.07, while
General Electric <GE.N> sagged 8 percent to $9.26.
                                
 After the Dow broke its November lows on Thursday to hit
fresh bear market lows, investors are worried that its breach
suggests the benchmark S&P 500 <.SPX> may not be far from
violating three-month lows as the gloom persists, and a retest
of levels not seen since 1997 may be looming.
                                
 The backdrop for the latest damage in the market is the
failure last week by U.S. Treasury Secretary Timothy Geithner
to restore confidence in the financial system when he unveiled
a financial sector rescue that fueled uncertainty about how
banks would be relieved of their toxic assets.
                                
 Additionally there are concerns that the $787 billion
economic stimulus signed into law by U.S. President Barack
Obama this week might not blunt the impact of the recession
soon enough.
 (Additional reporting by Edward Krudy; Editing by James
Dalgleish)