--Stocks decline as traders await news from EU debt summit, after ECB's Draghi douses hopes for more central-bank bond buying --Stronger U.S. jobless-claims figures spark brief rally in stock futures before Draghi's comments --ECB cuts lending rate to 1%, as widely expected By Brendan Conway Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- U.S. stocks fell in afternoon trading as investor focus shifted from disappointment over the European Central Bank to the closely watched summit on Europe's sovereign-debt crisis. The Dow Jones Industrial Average lost 171 points, or 1.4%, to 12026 in recent action. The Standard & Poor's 500-stock index shed 23 points, or 1.8%, to 1238 and the Nasdaq Composite lost 42 points, or 1.6%, to 2607. The losses sent the blue-chip Dow into negative territory for December even though it has gained for six of the last eight sessions. Sentiment turned negative before the session's open, after ECB President Mario Draghi quashed traders' hopes of more ECB bond buying. In addition, the central bank gave no new plans to bail out debt-laden governments. As expected, the ECB cut its key lending rate to 1% from 1.25%, but the new efforts stopped well short of committing to buy more government bonds. The ECB news put traders on edge just ahead of the Brussels summit, which kicked off with a working dinner and was set to continue through Friday. The summit has been the focus of traders' hopes for aggressive new plans to fight the sovereign-debt crisis. "We aren't expecting a masterstroke of an agreement," said John Toohey, vice president at USAA Investment Management Co. "[But] if they don't take any steps at all, it will be a big negative." Financial stocks posted the steepest losses. J.P. Morgan Chase lost 4.5% and Bank of America shed 4.4% to lead the Dow's decliners. Morgan Stanley and Citigroup were two of the S&P 500's biggest decliners, each sliding more than 7%. In U.S. economic data, the number of U.S. workers filing new applications for unemployment benefits fell to the lowest level in nine months, which helped limit the session's losses. Wholesale inventories for October rose 1.6% as companies stocked up in anticipation of strong holiday sales. European markets also declined. The Stoxx Europe 600 finished with a 1.5% loss and Germany's DAX shed 2%. Asian bourses fell, with Japan's Nikkei Stock Average losing 0.7%. "The expectations are ahead of the reality," said Jim Russell, regional investment manager for U.S. Bank Wealth Management. "We have seen the markets buy into optimistic statements on the resolution of this crisis, only to be disappointed." Gold futures settled down 1.8% at $1,709.80 a troy ounce. The dollar gained versus the euro and the Japanese yen. McDonald's was the strongest blue-chip stock and one of two Dow advancers, gaining 0.8%. The fast-food company's global same-store sales jumped a greater-than-expected 7.4% in November thanks to expanding premium and mid-tier products in Europe and adding Peppermint Mocha to the McCafe line-up in the U.S. Costco Wholesale shed 1.6% after the wholesale club reported fiscal first-quarter earnings grew just 2.6% despite a double-digit-percentage increase in sales because of rising costs. Affymax soared 39% after its dialysis treatment received a favorable vote from the Food and Drug Administration. Ciena climbed 2.9% after the network gear maker's fourth-quarter loss narrowed amid a big jump in revenue in high-margin packet-optical switching. MEMC Electronic Materials gained 2% after the company said it would cut 20% of its work force and reduce manufacturing capacity as part of a restructuring that will result in a fourth-quarter charge of nearly $700 million. Pacific Sunwear gained 14% after the company said it planned to close up to 200 stores in the coming 14 months and hopes to seek aid from a private-equity firm experienced with ailing retailers. Apparel maker G-III surged 18% after unveiling a deal with PVH's Calvin Klein to open women's sports apparel stores in the U.S. and China, overshadowing a lower-than-expected 2% gain in quarterly profits and lower full-year earnings projection. THQ slumped 34% after the videogame publisher cut its fiscal third-quarter revenue outlook 25% and cut its full-year earnings view. -By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com
