Euro zone leaders are scheduled to meet on Monday night in a last-ditch effort to reach a deal with Athens.
As bank withdrawals across Greece ballooned to about 4.2 billion euros this week, the European Central Bank boosted its emergency funding for Greek banks.
Friday's decline in stocks "has to do with the meeting on Monday," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco. "It's sort of the last lifeline they are going to throw out to Greece and people are selling ahead of that because of the uncertainty."
Lip said, however, that any sharp selling because of developments on Monday could be yet another buying opportunity for investors in U.S. stocks.
"If Greece leaves the union, that removes an uncertainty and is actually good for the markets over the long run; if there is a resolution, that is also good," said Lip. "In some way, whatever happens on Monday is a win-win and [a market selloff] is a buyable dip."
The Dow Jones industrial average fell 101.56 points, or 0.56 percent, to 18,014.28, the S&P 500 lost 11.48 points, or 0.54 percent, to 2,109.76 and the Nasdaq Composite dropped 15.95 points, or 0.31 percent, to 5,117.00.
Euro steady as Greece worries rise
The euro has held onto most of its mid-week gains despite slipping slightly against the US dollar and yen as worries over Greece surge.
The common currency was at $US1.1349 this morning and still well above the level it was at before the Federal Reserve showed itself more dovish than expected on US interest rates this week.
Greece is facing a June 30 deadline to obtain more bailout funds from its official creditors to make a debt repayment to the IMF.
The subdued reaction to the Greek crisis in recent weeks supports the notion that the exposure of Europe's private sector to Greece is minimal, and that a default or a Greek exit from the euro zone would have little impact on the other economies.
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