Greek Prime Minister Lucas Papademos arrives for a cabinet meeting New York - Arabstoday Stocks and the euro slipped as a plan for wage and pension cuts in Greece hit a new obstacle, raising fear the country may not get the aid it needs to avoid a messy default.The leader of the smallest party in Prime Minister Lucas Papademos’ coalition government, George Karatzaferis, said he could not vote in favor of a 130-billion-euro bailout agreement Greece needs to avoid default in March. Although the party has only 15 deputies out of 300, his comments drove nervous investors to sell stocks and the euro ahead of a parliamentary vote on the deal scheduled for Sunday. Selling was broad on Wall Street. Declining issues outpaced advancing shares by almost 4 to 1 among New York Stock Exchange-listed shares. The CBOE Volatility index, a measure of volatility known as investors’ “fear index,” spiked about 10 percent, its biggest jump in three months. That left the benchmark Standard & Poor’s 500 Index headed for its first weekly decline in the past six, while the euro retreated from Thursday’s two-month high above $1.33. “It’s not entirely surprising to see negative news overnight trigger a pretty sharp unwinding of risk,” said Omer Esiner, chief analyst at Commonwealth Foreign Exchange in Washington. “A lot of the uncertainty that has hung over markets for the better part of the last year remains largely in place,” he said. “This is a dose of reality for people.” Indeed, stocks have climbed some 7 percent over the last six weeks, capping off a 25 percent rally seen over four months. Optimism hit a crescendo Thursday on hopes Greece would soon receive an second bailout to stave off a default. “It’s perfectly reasonable that we should have a little bit of a pause here,” said Phil Orlando, chief equity market strategist at Federated Investors, in New York. The Dow Jones industrial average was down 135.31 points, or 1.05 percent, at 12,754.84. The Standard & Poor’s 500 Index was down 12.33 points, or 0.9 percent, at 1,339.65. The Nasdaq Composite Index was down 24.48 points, or 0.85 percent, at 2,902.44. A pre-weekend scramble for safety reversed the previous day’s decline in government debt prices. “It’s all about Greek headlines now. Generally speaking, investors don’t like being short Treasuries when these things are going on,” said David Keeble, global head of interest rates strategy at Credit Agricole Corporate & Investment. Yields, which move inversely to price, were down again on Friday, though, with the benchmark 10-year note up 22/32 in price to yield 1.96 percent. The 30-year yield slipped to 3.11 percent after hitting 3.23 percent on Thursday, its highest since late October. March Bund futures were more than a point higher at 138.47, with 10-year yields almost 10 basis points lower at 1.91. Earlier, euro zone finance ministers gave a lukewarm response to an inter-party agreement from Athens on austerity measures and set more conditions for Greece to secure a second bailout needed to ensure it can meet debt repayments next month. That left the Greek rescue deal in limbo and tempered some of the enthusiasm seen a day ago after Greek political leaders clinched an agreement on austerity after weeks of talks. “Markets seem to have had enough of it for now,” said Credit Agricole rate strategist Orlando Green. “It may just be kicking the can down the road again as debt is in unsustainable territory and whether they (Greece) can deliver something long lasting is another question.” The FTSEurofirst 300 index of top European shares fell 0.9 percent to close of 1,064.05. Earlier, Asian stocks also lost ground, pushing global stocks as measured by MSCI’s all-country world equity index down 1.4 percent. Still, the index is up more than 20 percent from its October trough as low interest rates from major central banks and a huge cash injection by the European Central Bank fueled a rally in stocks, commodities and higher-yielding currencies. The Greek plan agreed by Athens has fallen short of targets needed to bring its debt down to a more sustainable level. Jean-Claude Juncker, who chairs the group of euro zone finance ministers, said the Greek parliament must ratify the austerity package when it meets on Sunday and said a further 325 million euros of spending cuts needed to be put in place by Wednesday. Facing elections as soon as April, Greek political leaders are loath to accept tough measures with rising social unrest and mounting unemployment compounding the country’s woes. Growth-linked currencies such as the Australian dollar and commodities like copper and oil eased as investors cut exposure to riskier assets and preferred the safety of US Treasuries and German Bunds. Data showing China’s trade activity slowed sharply last month also dulled risk appetite. Crude oil slipped, halting an eight-day rally, as the International Energy Agency cut its oil growth demand forecast for a sixth consecutive month due to a weak global economy. But declines were capped by robust Chinese oil demand and political tensions over Iran. US crude, which had climbed for three days until Thursday, fell $1.23 to $98.61 a barrel.