* Barclays, citing higher uncertainty, cuts S&P target
* Moody's to downgrade French banks: sources
* Broadcom-NetLogic deal lifts semis, Nasdaq
* Dow down 1 pct, S&P down 1 pct, Nasdaq off 0.5 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates to afternoon trading)
By Ryan Vlastelica
NEW YORK, Sept 12 (Reuters) - U.S. stocks fell in volatile trading on Monday on concerns the euro zone's sovereign debt crisis could undermine a global economic recovery, but a U.S. tech deal limited losses on the Nasdaq composite index.
Wall Street oscillated between losses of more than 1 percent and a flat performance, with the declines spawned by worries Moody's Investors Service would downgrade French banks and by Greece's unresolved debt problems.
Fears Europe's credit crisis would drag in U.S. banks have been pressuring financial stocks for months, sending shares of some to at least two-year lows.
Citing "higher levels of economic uncertainty," Barclays Capital cut its full-year target for the S&P 500 stock index by about 9 percent to 1,325.
Sectors tied to economic growth prospects were among the hardest hit Monday, with the S&P material index <.GSPM> down 1.8 percent and the financial index <.GSPF> off 1.2 percent.
"There's a lot of uncertainty with respect to Europe, and so long as that exists, there's no drive to take us forward," said Joseph Cangemi, managing director at BNY ConvergEx Group in New York.
"We have no timeline about when we could get any clarity, and financials will continue to be the most egregiously hit in this environment."
France's top banks are bracing themselves for a likely downgrade from Moody's, sources close to the situation said, further complicating their efforts to assure investors they are riding out the tensions in funding markets.
A weekend meeting of finance ministers from the Group of Seven industrialized nations failed to come up with fresh proposals for boosting global growth. For details, see [ID:nN1E78728T] [ID:nL5E7KC0KE]
The Dow Jones industrial average <.DJI> was down 114.92 points, or 1.05 percent, at 10,877.21. The Standard & Poor's 500 Index <.SPX> was down 10.96 points, or 0.95 percent, at 1,143.27. The Nasdaq Composite Index <.IXIC> was down 11.55 points, or 0.47 percent, at 2,456.44.
About 80 percent of companies traded on the New York Stock Exchange were lower.
Losses were limited on the Nasdaq by NetLogic Microsystems
Inc
Broadcom fell 2.4 percent to $32.65 while the semiconductor index <.SOX> climbed 1.4 percent.
The merger "is a sign that many stocks are undervalued from a historical perspective," Cangemi said.
Economists last month slashed their growth forecasts for the United States, a survey showed on Monday, with most seeing at least even odds that the Federal Reserve will buy new bonds to help stimulate the recovery. [ID:nN1E7880UJ]
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