NEW YORK : Wall Street shares sustained fresh losses on Wednesday as a double dose of lacklustre economic news on the housing market and the factory sector dampened investor optimism.

Some traders said they were not surprised by the pullback after the Dow industrials had soared by more than 400 points in prior sessions, but the day's economic news delivered fresh ammunition to economists who believe the economy is already in a recession.

The Dow Jones Industrial Average closed down a notable 109.74 points (0.88 percent) at 12,422.86.

The Nasdaq composite lost 16.69 points (0.71 percent) to 2,324.36 and the broad market Standard & Poor's 500 index tumbled 11.86 points (0.88 percent) to close at 1,341.13.

"A barrage of weaker-than-expected economic data, combined with some negative analyst commentary on US banks, sent stocks spiralling into the red right out of the gate," said Elizabeth Harrow at Schaeffer's Investment Research.

Two separate government surveys showed another decline in new home sales during February and a fall in durable goods orders last month.

The Commerce Department said in a monthly snapshot that new home sales declined to a seasonally adjusted annual rate of 590,000 properties. Most economists had expected sales to fall, but January sales were revised higher to a sales pace of 601,000 units.

Median home prices showed some improvement, however, leading analysts to suggest that price declines over the past year may be tempting buyers back into the depressed market.

Home builder stocks were generally weaker. Pulte Homes' stock closed 5.7 percent lower at 14.19 dollars while Toll Brothers also dropped 5.7 percent to 22.58 dollars.

The government also reported a 1.7 percent drop in durable goods orders during February which confounded most analysts who had been expecting factory orders to rebound last month.

On the corporate front, US telecom giant Motorola Inc. said it would split into two independent firms as it seeks to stave off fierce competition from foreign rivals.

Motorola's shares ended up 2.7 percent at 10.02 dollars.

Oil major ExxonMobil saw its shares close up 1.2 percent at 86.26 dollars after announcing it had signed a new, 25-year production-sharing contract with Petronas, Malaysia's national oil company.

And as major US banks and financial firms continued to see their finances ravaged by losses on mortgage investments amid a broadening credit crunch, Treasury Secretary Henry Paulson said the government had embarked on a review of securities firm regulation.

Paulson, addressing the turmoil in the US financial and housing markets, said his office was working on a "blueprint for regulatory reform" in an effort to avert fresh Wall Street turmoil.

Ford's shares finished 2.2 percent lower at 5.87 dollars after India's Tata Motors announced it was buying British luxury icons Jaguar and Land Rover from the US carmaker for 2.3 billion dollars.

And US banking giant Citigroup said it agreed to pay 1.66 billion dollars to resolve its litigation with Enron creditors dating to the collapse of the former energy trading firm in 2001.

Citigroup's stock closed down 5.9 percent at 22.05 dollars.

Bond prices weakened as the yield on the 10-year US Treasury bond rose several notches to 3.494 percent from 3.492 percent on Tuesday and that on the 30-year bond increased to 4.330 percent from 4.299 percent.

Bond yields and prices move in opposite directions.

European stock markets closed lower on Wednesday, giving up some of the previous day's sharp gains. In London, the FTSE 100 index was down 0.50 percent at 5,660.40, in Paris the CAC 40 lost 0.33 percent to 4,676.68 and in Frankfurt the Dax fell 0.54 percent to 6,489.26. - AFP/de