NEW YORK - Stocks closed lower Tuesday following new worries about Europe's debt problems. Treasury prices rose and gold settled at a new high as investors sought out safe assets.

U.S. stocks followed European markets lower after news reports said banks in Europe may have more risky government debt on their books than was disclosed during "stress tests" earlier this year. That could mean fees from regulators and more capital-raising by the banks to bolster their balance sheets.

Shares of major European banks including Barclays PLC and UBS fell, and the dollar rose against the euro.

"The soundness of stress tests are, and continue to be, in question," said Brian O'Reilly, president of the Collingwood Group. Uncertainty about the tests could be a drag on the market until European regulators provide some more transparency about exactly what figures were included in the test, O'Reilly said.

The reports renewed worries about European government debt, which had flared up earlier this year following a fiscal crisis in Greece that spread to other weak European economies and helped bring stocks down worldwide.

Stocks had been doing well last week, rallying on improved news about job growth and gains in manufacturing in the U.S. and China. The better economic news helped the market end higher for the week, breaking three straight weeks of losses.

Many investors still have faith the economy is growing, but the pace of that growth is in question. Economic reports have been inconsistent, leaving traders overreacting to every bit of news, said James Angel, professor of finance at Georgetown University's McDonough School of Business.

"What it's going to take to keep (a rally) going is more good news," said Angel said.

The Dow Jones industrial average fell 107.24 points, or 1.0 percent, to close at 10,340.69.

Broader indexes also fell, making for a weak start to a week shortened by the Labor Day holiday on Monday. The Standard & Poor's 500 index lost 12.67, or 1.1 percent, to 1,091.84, while the Nasdaq composite index fell 24.86, or 1.1 percent, to 2,208.89.

About three stocks fell for every one that rose on the New York Stock Exchange, where volume was very light at 830.3 million shares.

Volume often starts to pick back up after Labor Day when traders return from summer vacations. But Brian Peardon, a wealth adviser at Harrison Financial Group, said many investors might continue to stay out of the market even when they get back because of uncertainty about the global economy.

"It's very tough for the public to decipher what's happening," Peardon said.

Uncertain investors continue to pour money into Treasurys. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.60 percent from 2.71 percent late Friday. Its yield is often used as a gauge to set interest rates on mortgages and other consumer loans.

Gold also rose as investors took money out of stocks and sought out other assets seen as having more stable value. Gold for December delivery rose $8.20 to settle at $1,259.30 an ounce.

Several reports later this week could shed more light on the U.S. economy including the "beige book" report from the Federal Reserve coming out on Wednesday and weekly unemployment numbers due out on Thursday.

Shares of Swiss bank UBS dropped 53 cents, or 2.9 percent, to $17.52. Spanish bank Banco Santander fell 48 cents, or 3.8 percent, to $12.20.

Barclays fell $1.15, or 5.7 percent, to $19.13. The British bank also announced Robert E. Diamond Jr., who built the company's global investment bank, will take over as CEO next year.

European markets ended lower. Britain's FTSE 100 fell 0.6 percent, Germany's DAX index dropped 0.6 percent, and France's CAC-40 fell 1.1 percent.