NEW YORK - The problems that have weighed on investors all summer - European debt and fear of a new recession in the United States - hammered the stock market Friday. The Dow Jones industrial average fell more than 300 points.

The plunge erased the week's gains for stocks and sent the Dow below 11,000. It had not closed below that level since Aug 22, after several weeks of extraordinary volatility.

The European Central Bank said a top official, Juergen Stark, was resigning almost three years before the end of his term in 2014, revealing deep disagreement over how to solve economic problems in Europe.

Traders fear that one of the continent's heavily indebted economies could default, an event that would ripple through the global banking system and make it difficult for other European countries to borrow money.

Such an outcome could tip the world economy back into recession. In the US, economic growth is already slowing, and unemployment is stuck above 9 percent.

Friday was also the first chance for the markets to react after President Barack Obama presented Congress and the nation a $447 billion jobs program. It is not clear to traders that the plan will get through a bitterly divided Congress.

The Dow finished down 304 points, or 2.7 percent, its steepest drop in more than three weeks. It closed at 10,992. The average approached a 400-point drop at some points in the afternoon.

"Markets always vacillate between fear and greed, and today we're coming down pretty much all on the fear side," said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.

The Standard & Poor's 500 closed down 32, or 2.7 percent, at 1,154. The Nasdaq composite is down 61, or 2.4 percent, at 2,468. All three indexes finished down for the week.

Investors drove the yield on the 10-year Treasury note to 1.92 percent, its lowest since the Federal Reserve Bank of St Louis began keeping daily records in 1962. The yield was 1.99 percent a day earlier.

Wall Street traders have poured money into US government debt all summer, driving the price up and the yield, which moves in the opposite direction, down.

Even after Congress narrowly met a deadline for raising the limit on how much the government can borrow, barely avoiding a default for the country, investors think US government can be counted on to pay its bills.

Word of the resignation of Stark, the top economist at the ECB, came shortly after US markets opened. He was an advocate for higher interest rates, and published reports said he left because he opposed the bank's extensive purchases of debt issued by European countries.

Stark's departure rattled traders because the US economy is "teetering on the verge of recession", and the outcome in Europe might determine which way it goes, said Andrew Goldberg, market strategist with JP Morgan Funds.

He said traders are latching onto any piece of news that might signal a positive or negative outcome in Europe.

Banks in Europe hold bonds issued by nations deep in debt, including Greece, Ireland and Portugal, but investors don't know exactly how much each bank holds from each country.

The value of the bonds would quickly diminish if one of those nations defaults. Banks might stop lending to each other because of fears that some would fail.

Stark's departure was seen as "a bit of news that contributes to a worse outcome, so if you're thinking of being a seller, today that's what you are", Goldberg said.

The central bank's troubles raise the stakes for a meeting this weekend in of financial leaders from the world's most developed economies.

High volatility returned to the market Friday. One measure known as the VIX, which measures investors' fears, increased 18 percent.

Friday's plunge extends a tough quarter for the stock market. The S&P 500 is down 13 percent since the third quarter started in July. However, it has recovered almost 4 percent since its lowest close this year Aug 8.

Analysts say stocks are likely to fall further as the crisis in Europe goes on. A shrinking European economy would hurt the US because roughly a quarter of American companies' revenue comes from Europe, said Sam Stovall, chief investment strategist for S&P in New York.

"Maybe the market has already priced in a very, very soft spot, but it has not priced in quicksand - it has not priced in a recession," he said.

Forrest, of Fort Pitt Capital, said the sell-off had brought some stock prices "within buying range". She said traders have few other places to invest, with Treasury yields near record lows and currency markets gyrating because of fears about the euro.

Markets in Europe also fell sharply. France's CAC 40 and Germany's Dax fell about 4 percent. London's FTSE lost more than 2 percent.

In the US, McDonald's Corp stock fell 4 percent because of disappointing revenue. McDonald's said that revenue at restaurants open at least 13 months rose 3.5 percent in August. Analysts expected 4.9 percent.

Bank of America Corp fell 3 percent after The Wall Street Journal reported that it might cut up to 14 percent of its work force as part of a massive restructuring. Bank of America already has cut at least 6,000 jobs this year. CEO Brian Moynihan announced a management shake-up this week.

VeriSign Inc, which manages Internet domain names, fell 15 percent after its chief financial officer resigned. Specialty glass maker Corning Inc fell 6 percent a day after it said it expected to sell less glass for LCD TVs than originally forecast.

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