US STOCKS-Wall Street drops 1 pct, fiscal deal unlikely before 2013

* Failure of Boehner's bill suggests compromise difficult

* Banking shares tumble, Citigroup and BofA shares drop

* Nike results beat expectations; RIM shares slump in US

* Indexes down: Dow 1 pct, S&P 1.1 pct, Nasdaq 1.5 pct

NEW YORK, Dec 21 (Reuters) - U.S stocks sank more than 1

percent on Friday after a Republican proposal for averting the

"fiscal cliff" failed to pass, diminishing hopes a deal would be

reached soon in Washington.

Trading is expected to be volatile as investors view a

fiscal agreement between the White House and Republicans before

the year-end as increasingly unlikely. With volume thin ahead of

the holidays, market swings could be amplified. The CBOE

Volatility index jumped 11.5 percent.

Late on Thursday, Republican House Speaker John Boehner

conceded there were insufficient votes from his party to pass a

tax bill, dubbed "Plan B," to help avert the cliff, $600 billion

of tax hikes and spending cuts due to start in January that

could tip the economy into recession.

Plan B had called for tax increases on those who earn $1

million a more a year, and the bill's failure suggested it would

be difficult to get Republican support for the more expansive

tax increases Obama has urged, making it less likely an

agreement will be reached between the White House and

Republicans before the end of the year.

"We had been moving in the right direction, but now we need

a different deal, and if this radical group of Republicans is so

intransigent that they won't do any deal, it will be very

difficult," said Wayne Kaufman, chief market analyst at John

Thomas Financial in New York.

Banking shares, which outperform in times of economic

expansion and have led the market on signs of progress with the

fiscal impasse, were among the hardest hit on Friday. Citigroup

Inc sank 2.5 percent to $39.15 while Bank of America

was off 2.5 percent to $11.23. The KBW Banks index

lost 1.4 percent.

The Dow Jones industrial average was down 134.93

points, or 1.01 percent, at 13,176.79. The Standard & Poor's 500

Index was down 16.08 points, or 1.11 percent, at

1,427.61. The Nasdaq Composite Index was down 45.57

points, or 1.49 percent, at 3,004.82.

The S&P 500 is up about 1 percent on the week and 14 percent

on the year, though uncertainty over the cliff may prompt many

traders to lock in gains as the year draws to a close.

The Thomson Reuters/University of Michigan's final December

reading on consumer sentiment fell to 72.9, weaker than

expected, as Americans were rattled by the stalemate in the

fiscal negotiations.

Orders for durable goods rose 0.7 percent in November, more

than expected, while personal income and spending were also

higher than forecast.

Nike Inc and Red Hat Inc were the top two

percentage gainers on the S&P 500. Nike rose 4.8 percent to

$103.76 after reporting second-quarter earnings that handily

beat expectations, while Red Hat gained 4.8 percent to $55.12 on

the back of strong revenue.

U.S.-listed shares of Research in Motion slumped 17

percent to $11.70 after reporting its first-ever decline in its

subscriber numbers late Thursday.

Source: http://news.yahoo.com/us-stocks-wall-street-drops-1-pct-fiscal-150144077--sector.html

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