U.S. stocks slid 2 percent on Thursday after new applications for jobless insurance rose unexpectedly, and basic materials shares sank as a rising U.S. dollar hurt commodity prices

The greenback rose against a basket of currencies <.DXY> as the euro slid to a seven-month low against the dollar on worries over sovereign debt in Greece, Portugal and Spain.

Among materials shares, U.S. Steel Corp fell 3.3 percent to $45.32 as the stronger dollar weakened commodity prices. The S&P materials sector index <.GSPM> dropped 3 percent, its biggest daily drop in two weeks.

Economic data also weighed on investors. Weekly initial claims for state unemployment benefits rose unexpectedly, the government said, pointing to stubborn weakness in the labor market.

At this point in the 'recovery,' there is concern about jobs, said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

The higher than expected (jobless claims) number indicates we're probably not in the job creation phase at this point.

Jobs creation is essential for a U.S. economic recovery since consumer spending makes up about two-thirds of the U.S. economy.

The Dow Jones industrial average <.DJI> dropped 176.24 points, or 1.72 percent, to 10,094.31. The Standard & Poor's 500 Index <.SPX> fell 22.26 points, or 2.03 percent, to 1,075.02. The Nasdaq Composite Index <.IXIC> lost 41.70 points, or 1.90 percent, to 2,149.21.

Weighing on financial shares, MasterCard Inc tumbled 7 percent to $230.27 after it posted quarterly earnings that fell short of Wall Street estimates.

(Editing by Jeffrey Benkoe)

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