Stocks stall on 'fiscal cliff,' Europe concerns

• Automatic spending cuts could push the U.S. into a recession
• Congress must come to a deal before Jan. 1 to prevent the cuts
• Investors around the world are closely watching Europe, U.S.

NEW YORK (AP) — Stocks ended essentially unchanged Monday as investors continue to worry about whether Congress and the White House can avert the so-called "fiscal cliff" before year-end.

Economists say there is a risk of another recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions take effect Jan. 1. Congress and the White House are tasked with finding a compromise by year-end to prevent a big hit to the world's biggest economy.

The Dow Jones industrial average ended down 1.2 points to 12,814.16. The broader Standard & Poor's 500 index ended up 0.2 points to 1,380. The tech-laden Nasdaq composite index closed down 0.6 points to 2,904.26.

Monday was one of the lightest trading sessions of the year. The bond market and the federal government are closed for the Veterans Day holiday.

One exception: Shares of department-store chain J.C. Penney (JCP) plunged more than 13.2% to close at $17.92 a share after its debt was downgraded two notches Friday by S&P's rating agency. Penney is struggling to regain the confidence of investors and its customers after eliminating deep discounts and implementing a new three-tiered pricing strategy earlier this year.

Investors also are focused on Europe as global lenders clear the path for a new bailout agreement in Greece, which recently appeared to be on the verge of bolting from the European Union monetary block.

In Europe, Greek lawmakers approved the country's 2013 austerity budget Monday. And the head of the finance ministers from the 17 euro countries then said that lenders have prepared a "positive" report on the country.

Greece is waiting for approval of the next $40 billion payout of its bailout loan. It faces a bond repayment on Friday it cannot afford without the payout.

Meantime, investors continue to hold back amid uncertainty over whether Washington can forge a deal to avoid on mandated spending cuts that would derail the U.S. recovery.

President Obama, fresh from a re-election victory, and Republican John Boehner, Speaker of the House of Representatives, have pledged compromise but appear to be digging in their heels on some issues, including whether to raise taxes for the wealthiest.

"Despite comments from the U.S. administration and Congressional leaders of a willingness to compromise, markets remain unconvinced," said Mitul Kotecha, analyst at Credit Agricole CIB.

The finance ministers of the eurozone will decide on the payout to Greece after they receive a report on the nation's fiscal situation from international debt inspectors. Germany's finance minister has said the report would likely not be delivered in time for Monday's meeting.

European stocks closed mixed Monday. Britain's FTSE 100 index ended flat at 5,767.27, while Germany's DAX 30 index finished essentially unchanged at 7,168.76. France's CAC-40 index closed down 0.4% to 3,411.65.

Earlier in Asia, Japan's Nikkei 225 index fell 0.9% to close at 8,676.44. Growth figures showed the Japanese economy contracted at an annualized 3.5% rate for the quarter ending Sept. 30. Most economists forecast a further decline in economic activity for the October-December quarter, which would officially put the world's No. 3 economy in recession, according to the common definition of two consecutive quarters of contraction.

South Korea's Kospi fell 0.2% to 1,900.87 and Australia's S&P/ASX 200 lost 0.3% to 4,448.00. Benchmarks in Singapore, Taiwan and Indonesia fell. The Philippines and New Zealand rose.

Hong Kong and mainland Chinese stock markets rose following comments over the weekend by Chinese Cabinet officials that a slowdown in the country's rapid growth rate has ended.

Hong Kong's Hang Seng added 0.2% to 21,430.30. The Shanghai Composite Index gained 0.5% to 2,079.27 and the smaller Shenzhen Composite Index added 0.5% to 832.38.

Jackson Wong, vice president at Tanrich Securities in Hong Kong, cautioned against too much optimism regarding China's economy amid disappointing Chinese loan growth figures.

Lending in October stood at $80.3 billion, dropping 81.6 billion yuan from a year earlier, the People's Bank of China said Monday, according to Xinhua news agency. The figure decreased from the 623.2 billion yuan of new yuan loans registered in September.

"Expect light trading this week unless major news comes out," Wong said.

Benchmark oil for December delivery closed down 49 cents to $85.58 in electronic trading on the New York Mercantile Exchange. The contract rose 98 cents to finish at $86.07 per barrel on the Nymex on Friday.

In currencies, the euro was flat at $1.2711 in New York. The dollar weakened against the Japanese yen, to 79.41 yen from 79.45 yen. Gold prices fell 0.2% to $1,727.30.