NEW YORK - US stocks skidded lower Friday in a late-day selloff as Wall Street reacted to a fresh surge in crude oil prices and a report that North Korea may be on the verge of a nuclear test.
The market gave back some of the gains from the biggest one-day rally in two years on Thursday.
The Dow Jones Industrial Average slumped 60.89 points (0.60 percent) to 10,157.71 and the Nasdaq dropped 30.22 points (1.54 percent) to close at 1,932.19.
The Standard and Poor's 500 index retreated 7.83 points (0.68 percent) to 1,152.12.
The market drifted lower in early trade, and then went into a steep decline in later afternoon before recovering some of the losses in the final minutes.
Factors pushing the market down included rising crude oil futures and a report that US officials had send an emergency message to China to help dissuade North Korea from a nuclear bomb test.
New York's main contract, light sweet crude for delivery in June, gained 1.19 dollars to 55.90 dollars per barrel in closing deals, capping a week in which crude oil rose more than five dollars.
"The price of oil went up, and what greased the slide is the report that a US aid warned that North Korea may be preparing a nuclear test," said Alfred Goldman at AG Edwards.
Robert Pavlik, portfolio manager at Oaktree Asset Management, said the market was digesting the big rally from Thursday, but was not sure if the indexes had reached bottom.
"I'd like to see it move it forward although I don't think we've necessarily reached a bottom," he said. "In the medium term, the market is having to work through this slowing of the economy."
European stock markets rallied on some positive corporate earnings news, while energy issues found support in higher oil prices, dealers said.
The London FTSE 100 index rose by 0.62 percent to 4,849.3, the Frankfurt DAX 30 climbed 0.70 percent to 4,223.04 and in Paris the CAC 40 added 0.74 percent to 3,980.18.
The DJ Euro Stoxx 50 index of leading eurozone shares advanced 0.88 percent to 2,976.39.
Among active US shares, Google powered higher by 11.59 or 5.9 percent to 215.81 after the Internet search giant crushed expectations with strong first quarter earnings and revenues.
Yahoo meanwhile fell 1.00 to 34.87 after it was downgraded to sector performer from outperformer by CIBC World Markets following Google's strong quarterly results.
Photo giant Kodak slid 2.85 to 27.55, a drop of more than nine percent, after reporting a 142 million dollar net loss on restructuring costs and lower sales, after which the company's debt was downgraded to "junk" status.
International Paper fell 45 cents to 33.85 despite reporting earnings ahead of most Wall Street forecasts.
In the telecom sector, Qwest fell six cents to 3.55 after unveiling its "best and final offer" of 9.7 billion dollars for rival MCI, up 19 cents at 26.69. Verizon, which has reached a merger deal with MCI despite a lower price, fell 20 cents to 34.06.
Elsewhere, shares of wine and spirits maker Fortune Brands, part of a global deal with France's Pernod Ricard to buy and break up British rival Allied Domecq, rose 69 cents to 87.75 after reporting first quarter earnings climbed 9.3 percent.
Shares of McDonald's Corp rose 21 cents to 30.06 after AG Edwards upgraded the fast food giant to buy from hold. The brokerage cited valuation and a continued improvement fundamentals, including better-than-expected same-store sales performance and evidence if a turnaround in Europe.
Bonds staged a rebound from Thursday's decline. The yield on the 10-year US Treasury bond dipped to 4.255 percent from 4.300 percent Thursday while that on the 30-year bond eased to 4.580 percent from 4.638 percent. Bond yields and prices move in opposite directions.

04/22/2005 21:16 GMT