Stocks falter as Europe worries dominate

NEW YORK (CNNMoney) -- Stocks fell at Thursday's open, as fears about Europe's debt crisis trumped two upbeat reports on the U.S. job market.
The Dow Jones industrial average (INDU) fell 69 points, or 0.5%, shortly after the opening bell. The S&P 500 (SPX) slid 6 points, or 0.5%. The Nasdaq (COMP) lost 2 points, or 0.1%.
Early Thursday, France's first bond auction of the year took center stage. Roughly €8 billion of 10- to 30-year bonds were sold, with the 10-year drawing an average yield of 3.29% -- an improvement over the 3.18% yield at its last auction in December.
That's "a long way from the punishing borrowing costs paid by Spain and Italy, but arguably a step closer to a credit rating downgrade," wrote Ranvir Singh, CEO of market analysis firm RANsquawk, in a note.
France's 10-year yield is hovering around 3%, while Italy's continues to flirt with 7% and the yield on Spain's 10-year bond is roughly 5.6%.
The threat of a downgrade to France's pristine AAA credit rating has worried investors after Fitch put the country on negative watch last month and Standard & Poor's said it was reviewing 15 members of the eurozone for a possible downgrade.
Meanwhile, yields on Spanish bonds rose after a government official said Wednesday the nation's banks would need to set aside another €50 billion as part of a restructuring of the Spanish banking sector.
Investors were also keeping an eye on Greece, where Prime Minister Lucas Papademos is under pressure to push through additional austerity reforms.
U.S. stocks are coming off a mixed close Wednesday. Strong auto sales and a rise in November factory orders supported stocks during the day, but investors were also cautious given Europe's debt crisis.
"We're going to have continued volatility through at least the first quarter, and it's probably going to be largely driven by what's going on overseas," said Tim Speiss, partner in charge of the Personal Wealth Advisors Group at EisnerAmper.
Banks, one of the hardest hit sectors in 2011, were under pressure, with shares of Morgan Stanley (MS, Fortune 500), Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Bank of America (BAC, Fortune 500) all down between 1% and 3% in early trading.
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Economy: Before the market opene, payroll processor ADP reported that private-sector employers added 325,000 jobs in December. That was much stronger than the 180,000 economists had expected.
The Labor Department said initial unemployment claims for the week ended Dec. 31 came in at 372,000 -- slightly lower than expectations of 375,000, according to a survey of analysts by Briefing.com -- and down from a revised 387,000 the prior week.
The Institute for Supply Management will also release the December installment of its services index, which tracks non-manufacturing orders, employment and inventories. The index is expected to rise to 53, from 52 in the month prior.
World markets: European stocks fell in midday trading. Britain's FTSE 100 (UKX) shed 0.6%, the DAX (DAX) in Germany lost 0.8% and France's CAC 40 (CAC40) edged lower 1%.
Asian markets ended mixed. The Shanghai Composite (SHCOMP) fell 1%, while the Hang Se