Stocks fall, dollar up

The Dow Jones Industrial Average fell 88.95 points, or 0.86 percent, at 10,294.43. The Standard & Poor's 500 Index lost 13.63 points, or 1.23 percent, at 1,094.38. The Nasdaq Composite Index dropped 35.70 points, or 1.59 percent, at 2,206.33.
European shares were hurt both by the data on German business sentiment and the US data. The pan-European FTSEurofirst 300 index closed down 1.1 percent at 1,011.62 points, with banks the worst performers.
The closely watched Standard & Poor's/Case-Shiller indexes added to the gloom on the economic outlook with a surprising drop in December US home prices, although the annual rate of decline slowed.
The Ifo institute's business climate index fell to 95.2 in February, lower than forecasts for 96.1.
And a Fitch Ratings credit downgrade of Greece's four largest banks reminded investors of the fiscal problems in Athens and the lack of clarity from the euro zone on how it might aid one of its members.
The US dollar rose versus major currencies as measured by the ICE Futures Exchanges's dollar index, which was up 0.48 percent at 80.891 from the prior session close of 80.507. The dollar fell 0.99 percent to 90.22 yen.
Sterling fell 0.38 percent to $1.5424 after Bank of England chief Mervyn King said in parliamentary testimony the central bank could increase quantitative easing if the economy worsens and the recovery remained fragile. The BoE paused its 200 billion sterling asset buying program earlier this month.
US Treasury bond prices rose on the weak US data. The benchmark 10-year US Treasury rose 18/32 of a point in price to yield 3.727 percent, ahead of an auction of $44 billion two-year notes by the US Treasury on Tuesday.
Looking ahead to Wednesday, Federal Reserve Chairman Ben Bernanke will testifies to Congress on the central bank's stimulus exit strategies, though speculation of a near-term rise in US interest rates stemming from the US central bank's hike in the discount rate last week has cooled.
In Europe, German two-year government bond yields touched a euro-lifetime low of 0.906 percent.
Benchmark crude for April delivery lost $1.58 at $78.73 a barrel on the New York Mercantile Exchange. In London, Brent crude fell $1.32 at $77.29 on the ICE futures exchange.
Oil prices had been rising for more than two weeks as a steady drumbeat of reports suggested that manufacturing, home building and other pillars of the American economy were improving. But the US continues to struggle with high unemployment, and a slump in consumer confidence may lead to another summer in which Americans cut back on travel.