Fears over unrest in Egypt sent U.S. stocks reeling Friday to their biggest one-day decline in months and put an end to the market's eight-week win streak, as investors sought safety while oil prices surged. The Dow Jones Industrial Average closed down 166.13 points, or 1.39%, to 11823.70, marking its largest one-day drop since Nov. 16. The slump pushed the Dow's week-to-date performance into the red, erasing a weekly gain it had coming into Friday's session. The Dow fell 0.41% on the week, its first weekly drop in nine weeks. The Standard & Poor's 500 index declined 23.20, or 1.79%, to 1276.34, its biggest one-day drop since Aug. 11. It fell 0.55% on the week.

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The Nasdaq Composite Index tumbled 68.39, or 2.48%, to 2686.89, also its biggest one-day drop since Aug. 11. It slipped 0.10% on the week. Nasdaq OMX Group restored the measure following dissemination issues earlier in the session. The declines came as Egypt's ruling regime faced its biggest challenge Friday, the fourth consecutive day of street protests. President Hosni Mubarak declared a curfew in riot-wracked Egyptian cities and army tanks began to enter streets to beat back crowds of protesters. The Egyptian leader essentially defied the recent urging by the U.S. to embrace reform. Meanwhile, crude-oil prices surged.

Shares of tankers and shippers climbed as investors bet on a shutdown of the Suez Canal. Frontline jumped 7.7%, Overseas Shipholding leapt 6% and General Maritime advanced 10%. Apache fell 1.3% as analysts at Houston energy research firm Tudor Pickering Holt noted the oil-and-gas explorer and producer gets about 25% of its production and cash flow from its business in Egypt. Investors flocked to the safety of the U.S. dollar and Treasurys and the stock market's fear gauge leapt to the highest point in nearly two months. The Chicago Board Options Exchange Market Volatility Index, or VIX, touched an intraday high of 19.86, a level not seen since Dec. 2. In the U.S., data showed gross domestic product, the broadest measure of an economy's size, rose at an inflation-adjusted annual rate of 3.2% in the fourth quarter. Consumer spending, accounting for about 70% of demand in the U.S. economy, rose at a 4.4% rate in the fourth quarter. Still, the GDP reading was below the 3.5% expansion that economists expected. Microsoft led the Dow's decliners, falling 3.9% a day after the software company posted a slight drop in quarterly profit. Revenue rose 5% on strong demand for its Kinect videogame device and Office software. Chevron fell 1.5%. The oil company's fourth-quarter earnings surged 72% on strong oil prices, improved refining margins and an asset-sale gain. Its revenue fell short of analyst expectations.

European markets

European markets slumped Friday, with French and U.K. stocks posting particularly steep losses, as data showing a decline in U.S. consumer sentiment rekindled economic worries. Stocks continued to drop into the close as the fourth day of demonstrations in Egypt turned violent, pushing U.S. markets lower as well and sending oil prices surging on fears that the Suez Canal could be closed. The Stoxx Europe 600 index dropped 0.9% to end at 280.45. Meanwhile, the cost of insuring Egypt's sovereign debt against default rose significantly late in the day as the president of the country called out the army to confront protesters.

The annual cost of insuring $10 million against default rose to $450,000 late in Europe, jumping $50,000 in just one hour and up $65,000 from a day earlier, according to data provider Markit. Even without the protests, the country's stock market would have been closed; Friday is part of the weekend there. The EGX 30 plummeted 10.5% on Thursday, where trading was halted for 30 minutes immediately after the open after the index plunged 6%, and 6.1% on Wednesday.

Among major national European stock-market indexes, the U.K.'s FTSE 100 index fell 1.4% to 5881.37 and France's CAC 40 index sank 1.4% to 4002.32, while the German DAX 30 index shed 0.7% to 7102.80. In London, mining stocks fell sharply. Shares of Vedanta Resources dropped 4.5% and Antofagasta fell nearly 3%. TUI Travel sank 4.5%. Sanofi-Aventis declined 3.8% in Paris after the drug giant said a trial evaluating its breast cancer drug iniparib didn't slow the progression of the disease or aid in survival rates. Renault lost 3.3% after being cut to sell from neutral at Goldman Sachs, which shook up its ratings on the sector. In Spain, Criteria Caixa soared 17% after La Caixa, the biggest and healthiest of Spain's large so-called cajas, said it will transfer its banking business to the company and rename it CaixaBank.

Asian markets

Asian markets ended mostly lower Friday, with stocks in Tokyo sliding after Standard & Poor's cut the country's sovereign-debt rating Thursday, while Indian shares stumbled as interest-rate-sensitive sectors dropped. Japan's Nikkei Stock Average fell 1.1%, South Korea's Kospi slipped 0.3% and the Hong Kong's Hang Seng index declined 0.7%, while China's Shanghai Composite edged up 0.1%. Tokyo stocks fell as Standard & Poor's downgrade of Japan's sovereign credit rating to AA- from AA spurred broad profit-taking from technology exporters such as Advantest to financials such as Mitsubishi UFJ Financial Group. While S&P's move produced a sharp initial fall in the yen, the weaker Japanese currency--normally conducive to higher exporter shares prices--proved enough of a general sell catalyst to induce profit-taking as the Nikkei had already risen 14% from end-October through Thursday.

Among financials, Mitsubishi UFJ Financial shed 2.7% and Mizuho Financial fell 1.2%. Downbeat earnings for some companies further spooked the market. Advantest lost 7.4% after the company disclosed for the first time a full-year outlook below market expectations. The S&P downgrade also weighed on shares in South Korea amid weakened sentiment for risky assets, with automakers hurt by concerns yen weakness might injure their price competitiveness in the global market. Hyundai Motor fell 4.1% and Kia Motors lost 3.1%. Heavyweight China property developers extended recent losses after two of the mainland's largest cities introduced property tax trials. Among Hong Kong-listed plays, China Resources Land was down 0.4% after dropping 3.9% Thursday and China Overseas Land fell 0.3% after shedding 4.9% Thursday. On the mainland, China Vanke, the nation's largest property developer by market share, shed 0.5% and Poly Real Estate fell 1.2%.

Base metals

Base metals closed higher on the London Metal Exchange Friday, despite a strengthening dollar, as firm gross domestic product data and positive consumer confidence figures from the U.S. buoyed investor confidence in the complex. Copper made solid gains, breaking through $9,600 a metric ton to close at $9,530/ton, up 1.0% on the day. Meanwhile, tin continued to lead the complex, breaking through $30,000/ton in afternoon trading to set a new record high of $30,040/ton. Concerns about supply from Indonesia, where heavy rains and floods caused by the La Nina weather pattern have hit tin miners, helped underpin tin prices. At the PM kerb close, tin traded at $29,650/ton, up 2.0% on the day.

Oil

Oil prices surged Friday after antigovernment protests intensified in Egypt, touching off fears that the unrest that has swept several countries in the region could spread to major oil-producing states. Light, sweet crude for March delivery rose $3.70, or 4.3%, to settle at $89.34 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange gained $2.03, or 2.1%, at $99.42 a barrel, the highest settlement in 28 months. Investors returned to the refuge of gold during violent protests in Egypt, helping the metal bounce from nearly four-month lows. Gold for February delivery rose $22.30, or 1.7%, to settle at $1,340.70 a troy ounce on the Comex division of the New York Mercantile Exchange.

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