The morning dive briefly erased nearly all of the 123-point gain the Dow Jones industrial average made on Tuesday and sent the index back under the 12,000 level.

But within a half-hour the markets had recovered a bit and in early trading the Dow was off 72.32 points, or 0.6 percent, to 12,003.79. The Standard Poor’s 500-stock index lost 7.61 points, or 0.6 percent, and the Nasdaq composite was down 10.82 points, or 0.4 percent.

The Empire State manufacturing index, an early indicator of factory conditions from the Federal Reserve Bank of New York, unexpectedly contracted in June, falling below zero for the first time since November.

“I assume people will look at this as another reason the recovery is stalling,” said Paul Radeke, vice president at KDV Wealth Management in Minneapolis.

“Other data has shown that the consumer remains on track, suggesting that eventually manufacturing will catch up. However, this data suggests that process will take longer.”

The Consumer Price Index rose more than expected in May to post its largest increase in nearly three years, lifted by steep rises in motor vehicle and apparel prices. The Labor Department said on Wednesday the so-called core C.P.I., which excludes food and energy, increased 0.3 percent, the largest gain since July 2008, after rising 0.2 in April. Economists had expected the core C.P.I. to rise 0.2 percent last month.

Data on Tuesday showed retail sales declined for the first time in 11 months in May, but the fall was less than forecast.

European equities lost more than 1 percent before New York opened, the euro fell and safe-haven government bonds rose on Wednesday as divisions among euro zone officials over a new aid plan for debt-laden Greece curbed appetite for risky assets.

Worry about lack of substantive progress toward a blueprint for tackling the euro zone debt crisis kept investors on edge, traders said, pushing Greek, Portuguese and Irish bond yields to their highest levels since the introduction of the euro in 1999.

Striking Greeks raged against a new wave of austerity after euro zone finance ministers failed to agree how to make private creditors contribute to a second bailout for their indebted country.

Selling pressure on the euro also increased after Moody’s put BNP Paribas, Crédit Agricole and Société Générale on review for a possible downgrade, citing the French banks’ holdings of Greek public and private debt.

That warning depressed European banking stocks, pushing the FTSEurofirst 300 index of top European shares more than 1 percent lower.

“At some stage they are going to have to grasp the nettle” on Greece, said Justin Urquhart Stewart, director at Seven Investment Management. “A lot of that is dependent on the banks being strong enough to take the hit. The euro is damaged — the people operating it don’t want to change it.”

The euro fell nearly 1 percent against the dollar, sending it close to a recent low of $1.4285.

World stocks as measured by MSCI fell 0.4 percent, with some strategists saying more weakness could be in store for European shares.

“The easiest way for markets to deal with uncertainty is to go down,” said Philip Isherwood, European equities strategist at Evolution Securities.

On Tuesday, the Dow Jones industrial average gained 123.14 points, or 1.0 percent, to 12,076.11. The Standard Poor’s 500-stock index rose 16.04 points, or 1.3 percent, to 1,287.87. The Nasdaq composite index advanced 39.03 points, or 1.5 percent, to 2,678.72.

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