Stocks fell and the S&P 500 closed at a 12-year low on Friday, after the government said it will take a large stake in Citigroup's common shares, fanning fears it will increase its role in other major banks.

* Data showing the U.S. economy shrinking at an annual rate of 6.2 percent last quarter also weighed on the market.

* The Dow Jones industrial average <.DJI> fell 119.15 points, or 1.66 percent, to 7,062.93. The Standard & Poor's 500 Index <.SPX> lost 17.74 points, or 2.36 percent, to 735.09. The Nasdaq Composite Index <.IXIC> was down 13.63 points, or 0.98 percent, at 1,377.84.

(Reporting by Leah Schnurr)