Stocks extended declines on Monday on investor concern about the banking sector's exposure to a possible sovereign default in Greece and its effect on European lenders.

The Dow Jones industrial average dropped 195.71 points, or 1.79 percent, to 10,717.67. The Standard & Poor's 500 Index dropped 23.18 points, or 2.05 percent, to 1,108.24. The Nasdaq Composite Index dropped 56.52 points, or 2.34 percent, to 2,358.88.

Belgian-French bank Dexia's capital position looked increasingly stretched by its exposure to debt-laden Greece. The bank's board will hold a meeting later on Monday, a source said.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)