Stocks fell on Friday, led by energy and commodity-related shares as the market fell in tandem with the euro in a dance driven by the euro zone's debt problems.

While commodity shares were the hardest hit, the overall broader market reflected investors' concerns with more than two stocks falling for every one that rose on the New York Stock Exchange.

Euro -- it's all about the euro. Across the board, your commodity stocks aren't doing well. But keep in mind, your other problem out there is that as the dollar strengthens, your multinational dollar-sensitive, large cyclical companies go down also, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

The euro disintegrates here and the market disintegrates.

The euro lost nearly 1 percent over disagreements on how to handle debt problems in Greece and ahead of a Spanish regional election, pulling U.S. crude oil prices down 0.9 percent.

Chevron Corp lost 1.2 percent to $102.64 and Exxon Mobil Corp shed 1.1 percent to $81.40.

Caterpillar Inc declined 0.9 percent to $104.39. The S&P Cap Goods sector index <.15GSPIC> lost 1.2 percent.

In the options market, the predominant activity favored more bearish bets than have been seen over the past month.

Ahead of options expiration at Friday's close, traders exchanged about 194,000 contracts on the S&P 500 <.SPX> as puts outpaced calls by a ratio of 3.33:1 by 10:43 a.m. EDT, according to options analytics firm Trade Alert. That is higher than the 22-day moving average of 1.67 for the SPX put-to-call ratio.

The Dow Jones industrial average <.DJI> dropped 92.78 points, or 0.74 percent, to 12,512.54. The Standard & Poor's 500 Index <.SPX> lost 9.35 points, or 0.70 percent, to 1,334.25. The Nasdaq Composite Index <.IXIC> fell 22.71 points, or 0.80 percent, to 2,800.60.

The S&P 500 was on track for its third straight weekly decline, down 0.3 percent for the week.

Retailers also weighed the broader market as clothing chain Gap Inc plummeted 17.5 percent to $19.21 after slashing its full-year profit outlook late Thursday, saying higher price tags will not be enough to offset rising cotton costs.

But Barnes & Noble Inc shares jumped 31.8 percent to $18.59 after John Malone's Liberty Media Corp proposed buying the company for $1.02 billion. The largest U.S. bookstore chain put itself up for sale nine months ago.

The Morgan Stanley retail index <.MVR> fell 1 percent.

(Reporting by Chuck Mikolajczak; Additional reporting by Doris Frankel; Editing by Jan Paschal)

Energy