Stocks tumbled on Tuesday after a sharp decline in consumer confidence and on fresh concerns over euro zone fiscal problems ahead of massive bank repayments to the European Central Bank this week.

The S&P dropped to within striking distance of its 2010 low, which analysts said could trigger a further sell-off.

U.S. consumer confidence dropped sharply in June after rising for three months on worries about the labor market, according to a report from the Conference Board.

The slumping sentiment added to fears of a potential liquidity shortfall of more than 100 billion euros in the financial system as European banks repay 442 billion euros ($545.5 billion) in emergency loans on Thursday.

It wasn't good. This is a continuation from what we saw this morning, first from China, then Europe and now the U.S., said Bart Barnett, head of listed trading at Morgan Keegan & Co.

The Dow Jones industrial average <.DJI> was down 255.14 points, or 2.52 percent, at 9,883.38. The Standard & Poor's 500 Index <.SPX> slid 28.58 points, or 2.66 percent, at 1,045.99. The Nasdaq Composite Index <.IXIC> dropped 68.52 points, or 3.09 percent, at 2,152.13.

The three main U.S. stock indexes were already in a weak technical position after their daily MACD, a widely followed momentum indicator, generated a 'sell' signal.

Earlier in the day, the Conference Board corrected its leading economic index for China to a rise of 0.3 percent in April from an earlier reported 1.7 percent rise.

The correction prompted investors to turn against riskier assets, adding to a global sell-off. The Shanghai composite index fell 4.3 percent to a new 14-month low.

The hint of moderation is what alarmed markets as it comes in the context of fragile U.S. and European economies at the time we look to Asia as the global economic savior, said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.

U.S. crude oil futures dropped 3.4 percent to $75.61 a barrel, and the euro hit a lifetime low against the Swiss franc and an 8-1/2 bottom against the yen.

Moving in tandem with stocks, the euro has become a proxy for risk aversion. The 25-day rolling correlation between the euro and the S&P 500 rose to just short of 0.67 Tuesday.

The three-month LIBOR in euros, the price that European banks charge each other for short-term loans, rose to an 8-month high.

The CBOE volatility index <.VIX>, known as Wall Street's fear gauge, rose percent 16 percent to a session high of 34.39.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

China S&P