Dow Jones: 12,169.88 (–88.32) SP 500: 1,321.15 (–9.82) Nasdaq: 2,784.67 (–14.07):US STOCKS fell yesterday, erasing almost half of the biggest daily gain in three months, amid concern that oil's rise to a 29-month high will curtail the expansion in the world's biggest economy.

Caterpillar and General Electric slumped at least 1.1 per cent, pacing declines in industrial companies, which are among stocks most dependent on economic growth.

Citigroup and Goldman Sachs fell more than 2.1 per cent after Bank of America cut their ratings.

Marvell Technology tumbled 11 per cent as the maker of processors for the BlackBerry phone forecast sales that missed estimates.

The Dow Jones industrial average was down 88.32 points, or 0.72 per cent, at 12,169.88.

The Standard Poor’s 500 Index fell 9.82 points, or 0.74 per cent, at 1,321.15.

The Nasdaq Composite Index dropped 14.07 points, or 0.50 per cent, at 2,784.67.

Crude oil rose to $104.94 a barrel in New York as Libyan rebels repelled government attempts to retake oil hubs.

“It’s all about oil today,” said Michael Mullaney, who manages $9.5 billion at Fiduciary Trust in Boston.

“That geopolitical concern continues to be a serious issue. If crude stays above $100, it could be a problem for consumption. Again, we do have a great background for stocks, but the impact of inflation should be an overhang,” he said.

Libyan leader Muammar Gadafy sent troops to recapture towns in the western part of the country and prepared to quash protests in the capital, Tripoli.

“We’ve had a v-shaped recovery, but it’s a slower move coming off the bottom,” said Liz Ann Sonders, the New York- based chief investment strategist at Charles Schwab. “We’ve gotten to sentiment extremes and that increases the market vulnerability and that’s exactly what we saw with the unrest in the Middle East. There’s no question the rise in commodity prices hits consumption,” he said.

Average hourly earnings were unchanged in February, Labor Department data showed. Economists had forecast a 0.2 per cent growth. The data offset a 192,000 rise in payrolls and a fall in the jobless rate to 8.9 per cent, the lowest since April 2009. – (Bloomberg)