U.S. stocks suffered their biggest decline in three weeks on Thursday after weak employment and durable goods data added to recent worries about the strength of the economic recovery.

Weighing further on Wall Street, rating agencies said they might downgrade Greece's sovereign debt rating, refocusing attention on the weak fiscal health of some euro zone countries.

Industrial shares pulled down the S&P 500, with heavy equipment maker Caterpillar Inc off 2.4 percent to $55.61, and Boeing Co sliding 2 percent to $62.21.

The government said demand for a wide range of U.S. manufactured goods unexpectedly fell in January, while the number of workers filing for jobless benefits rose to 496,000 last week.

The economic releases this morning were a little bit disappointing, said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

The major concern (on the market) has been that the overall economy might stall, and there's a lot of attention on these numbers.

The Dow Jones industrial average <.DJI> fell 170.57 points, or 1.64 percent, to 10,203.59. The Standard & Poor's 500 Index <.SPX> lost 16.65 points, or 1.51 percent, to 1,088.59. The Nasdaq Composite Index <.IXIC> dropped 31.62 points, or 1.41 percent, to 2,204.28.

Coca-Cola Co was the top drag on the Dow after it said it will acquire the North American bottling businesses of Coca-Cola Enterprises Inc for about $13 billion. Coke shares fell 4.3 percent to $52.76, while CCE soared 34.2 percent to $25.75.

Dow component JP Morgan Chase & Co lost 2.4 percent to $39.87, and Chevron Corp shed 2 percent to $70.98.

Health insurance stocks were on focus as U.S. President Barack Obama opened a healthcare reform summit in Washington. The wider Morgan Stanley healthcare payor index <.HMO> fell 1.3 percent.

Moody's said a change in Greece's rating would depend on whether Athens could smoothly enact a fiscal reform plan, while Standard & Poor's said a downgrade by one or two notches in the next month was possible. The move could increase borrowing costs and exacerbate Greece's problems.

Thursday's U.S. economic data came on top of disappointing consumer sentiment and house prices numbers earlier this week.

(Editing by Jeffrey Benkoe)

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