* Brent crude over $115/bbl on Libya, Mideast worries
* Market's "fear gauge" jumps 13 percent
* Bernanke says oil unlikely to derail economy
* Indexes down: Dow 1.4 pct, S&P 1.6 pct, Nasdaq 1.6 pct
* For up-to-the-minute market news see []
(Updates to close)
By Angela Moon
NEW YORK, March 1 (Reuters) - Concerns that rising oil
prices could hurt economic recovery prompted investors on
Tuesday to sell stocks and hedge against further declines.
The CBOE Volatility Index VIX <.VIX>, Wall Street's
so-called fear gauge, jumped 13.1 percent to 20.75 on growing
uncertainty about oil. The index measures the cost of using
options as insurance against a decline in the S&P 500 <.SPX>
index.
"We've been seeing how quickly the VIX can spike up, and
there is no reason to believe that it won't double from where
it is now," said Harry Rady, CEO of Rady Asset Management in
San Diego, California.
Brent crude rose above $115 a barrel as supply disruptions
persist and political violence spreads in the Middle East and
North Africa. Higher oil translates into increased energy and
gasoline costs for consumers. For details, see []
Federal Reserve Chairman Ben Bernanke said the recent surge
in oil was unlikely to derail the economy, but his comments did
little to reassure investors worried that turmoil in the Middle
East could hit Saudi Arabia, the world's largest oil exporter.
[] The Dow Jones Transports index <.DJT> fell 2.5
percent.
Stocks have taken their cue from oil since the start of
turmoil in the Middle East and North Africa in January. The S&P
had its weakest performance since November last week but still
tallied three months of gains.
The Dow Jones industrial average <> fell 169.38 points,
or 1.39 percent, at 12,056.96. The Standard & Poor's 500 Index
dropped 21.04 points, or 1.59 percent, to 1,306.18. The Nasdaq
Composite Index <> lost 44.86 points, or 1.61 percent, to
2,737.41.
About 8.67 billion shares traded on the New York Stock
Exchange, NYSE Amex and Nasdaq, higher than last year's daily
average of 8.47 billion. Volume has recently been solid on days
when the market falls, but often comes under 7 billion on up
days.
Investors took a cautious stance as cyclical sectors
experienced the biggest losses, while defensive sectors such as
utilities, healthcare and consumer staples limited losses.
Wal-Mart Stores Inc <WMT.N> and Coca-Cola Co <KO.N> helped
the Dow to limit losses. Wal-Mart rose 0.2 percent to $52.06,
while Coca-Cola was up 1.5 percent to $64.91.
Gasoline <RBc1> and heating oil <HOc1> futures each gained
about 3.5 percent to $3. The S&P's materials <.GSPM> index
dropped 2.3 percent while the industrials <> dropped 2.2
percent. According to AAA, the national average price of
regular unleaded gasoline is currently at $3.35 per gallon.
"The real story is gasoline," said Nick Kalivas an analyst,
at MF Global in Chicago. "The market is getting worried that
you could see $4 gasoline in the U.S."
Financial stocks came under pressure after JPMorgan Chase &
Co <JPM.N> said it could face "material" fines and
"significant" legal costs from a wide-ranging probe into the
industry's foreclosure practices. []
JP Morgan fell 2.3 percent to $45.60 while the KBW bank
index <.BKX> fell 2.3 percent.
(Reporting by Angela Moon, Editing by Kenneth Barry)
