CORRECTED - US STOCKS-Wall St sinks on economic alarm

                                
  (Corrects paragraph 2 to delete reference to "worst day
since May 6")
                                
 * Investors wary ahead of European bank repayments to ECB
                                
 * Consumer confidence falls in June on job woes
                                
 * Dow off 2.7 pct, S&P down 3.1 pct, Nasdaq off 3.9 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Adds General Mills earnings)
                                
 By Chuck Mikolajczak
                                
 NEW YORK, June 29 (Reuters) - Investors fled the U.S.
stock market on Tuesday and the S&P 500 tumbled to its lowest
level in eight months in a sell-off triggered by a wave of
increasing alarm over the global economic outlook.
                                
 All but one stock in the S&P 500 ended lower as escalating
doubts about the stability of Europe's banks roiled markets
once again.
                                
 The S&P 500 had tumbled below its 2010 intraday low of
1,040.78 during the session, which analysts said could ignite
further declines. The index closed at its lowest level since
Oct. 30, breaking its closing low for the year at 1,050.47 --
another bearish signal for markets.
                                
 "Everybody is talking about 1,040, that it is the do-all,
end-all, blow it up, end of the world, blood on the streets
level. The market crashes, the S&P goes to 900," said Marc
Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San
Francisco.
                                
 Economically sensitive sectors such as materials,
industrials and financials were among the hardest hit.
                                
 Boeing Co <BA.N> slid 6.3 percent to $63.04 and
Caterpillar Inc <CAT.N> shed 5.5 percent to $60.85.
Diversified manufacturer 3M Co <MMM.N>, which raised its
second-quarter sales outlook last night, was not immune to the
selling pressure, dipping 0.6 percent to $78.49. For details,
see [ID:nN2895865]
                                
 The Dow Jones industrial average <.DJI> lost 268.22
points, or 2.65 percent, to 9,870.30. The Standard & Poor's
500 Index <.SPX> fell 33.33 points, or 3.10 percent, to
1,041.24. The Nasdaq Composite Index <.IXIC> dropped 85.47
points, or 3.85 percent, to 2,135.18.
                                
 Fears about the strength of the banking system surfaced
again, with investors worried about a potential liquidity
shortfall of more than 100 billion euros in the financial
system as European banks repay 442 billion euros ($545.5
billion) in emergency loans on Thursday. [ID:nLDE65S0M0]
                                
 The KBW Bank index <.BKX> fell 4.4 percent and broke its
200-day moving average today at 48.00, which it had made a
stand at last Thursday and Friday.
                                
 "The break of the 200-day moving average fueled more
selling. Technically, this is another sign of weakness in the
financials," said Elliot Spar, option market strategist at
Stifel Nicolaus in Shrewsbury, New Jersey.
                                
 The CBOE volatility index <.VIX>, known as Wall Street's
fear gauge, surged 22 percent to a session high of 35.39, its
highest level since early June, in a sign more volatility
could be in the offing. [ID:nN29161109]
                                
 Earlier in the day, the Conference Board corrected its
leading economic index for China to an April gain of 0.3
percent from a previously reported rise of 1.7 percent, a
sharp revision that undermined confidence in China's ability
to sustain strong growth. [ID:nN29126233]
                                
 The correction prompted investors to turn against riskier
assets, adding to a global sell-off. The Shanghai Composite
Index fell 4.3 percent to end at a 14-month low.
                                
 U.S. consumer confidence dropped sharply in June, after
rising for three months, on worries about the labor market,
according to a report from the Conference Board. The news
heightened fears of an economic slowdown after a recent spate
of weak data from the housing and job markets.
[ID:nN29138077]
                                
 "The day started with overseas -- China -- that was bad,"
said Joe Saluzzi, co-manager of trading at Themis Trading in
Chatham, New Jersey. "Then it got banged out with the consumer
confidence and it all just kind of went from there."
                                
 After the closing bell, General Mills Inc <GIS.N> dropped
4.6 percent to $35.20 after the maker of Cheerios cereal and
Haagen-Dazs ice cream reported a lower quarterly profit.
[ID:nN29163341]
                                
 About 11.38 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, above last
year's estimated daily average of 9.65 billion.
                                
 Declining stocks outnumbered advancing ones on the New
York Stock Exchange by 2,831 to 259, while on the Nasdaq,
there were 2,393 declining stocks and only 279 advancers.
 (Reporting by Chuck Mikolajczak; Additional reporting by
Doris Frankel; Editing by Jan Paschal)