* Cyprus crisis fuels worry about contagion in euro zone
* Parliament in Cyprus rejects tax on bank deposits
* Housing starts rise, permits at 4-1/2 year high
* Walgreen, Amerisource jump after deal
* Dow off 0.2 pct, S&P 500 off 0.5 pct, Nasdaq off 0.6 pct
By Rodrigo Campos
NEW YORK, March 19 (Reuters) - U.S. stocks fell on Tuesday
on uncertainty about how Cyprus will avoid a bankruptcy and
possible reverberations in the euro zone as the region struggles
to emerge from economic crisis.
Cyprus' parliament rejected a tax on bank deposits as a
condition of an international bailout.
Banks in Cyprus will remain closed until Thursday.
Investors in U.S. equities took advantage of the anxiety in
Europe to cash in some recent gains, which have put the S&P 500
on track to post its best quarter in a year. Tuesday's selloff,
however, has set the S&P 500 for its biggest largest daily loss
in three weeks.
The market's decline is a reaction to uncertainty
surrounding the vote in Cyprus and its implications for the euro
zone's recovery, said Hugh Anderson, managing director at
HighTower Advisors in Las Vegas.
"Stronger nations have been willing to backstop the weaker
ones, but there seems to be a limited supply of patience," he
"The market is ready for a reasonable correction," Anderson
said, regarding the S&P 500's gain of nearly 10 percent so far
this year. "Whether it will be more significant because of an
unforeseen catalyst remains to be seen."
European bank shares extended Monday's decline, with the
sector's index down 2.1 percent in Tuesday's trading.
On Wall Street, energy-related stocks led declines, with the
PHLX oil services sector index down 2.6 percent.
Schlumberger Ltd fell 3.9 percent to $73.39. Halliburton
dropped 4.4 percent to $38.92.
Brent crude oil futures hit a three-month low below
$108 per barrel on concern about energy demand in Europe if the
situation in Cyprus were to escalate.
The Dow Jones industrial average fell 29.76 points or
0.21 percent, to 14,422.30. The S&P 500 lost 7.95 points
or 0.51 percent, to 1,544.15. The Nasdaq Composite
dropped 20.78 points, or 0.64 percent, to 3,216.81.
Walgreen Co and partner Alliance Boots said
they signed a 10-year deal with AmerisourceBergen and
will take a stake in the distribution company, ending Walgreen's
current contract with Cardinal Health Inc.
Walgreen shares hit $45.80, their highest since September
2007, and were last up 5.3 percent at $44.66. Amerisource gained
5.1 percent to $50.78. In contrast, Cardinal lost 7.3 percent to
Housing starts data showed that groundbreaking to build new
U.S. homes climbed in February and new permits for construction
rose to their highest since 2008, in a sign the U.S. housing
market's recovery was building momentum.
The PHLX housing sector index rose 0.4 percent to
191.86, after earlier hitting 194.41 - its highest level since
late July 2007.
Shares of Electronic Arts Inc fell 8.7 percent to
$17.10 a day after the video games publisher's chief executive
resigned after six years at the helm, saying he held himself
accountable for missed targets.
Drugmaker Affymax Inc said it was considering
selling itself or filing for bankruptcy as it struggles to stay
afloat following the recent recall of its sole commercial
product, the anemia drug, Omontys. The stock
plunged 63.7 percent to $1.07.