TIM PARADIS

AP Business Writer

NEW YORK (AP) Stocks fluctuated early Friday after a slide in the previous session as investors fretted over the health of government balance sheets.

Trading began quietly ahead of the long Memorial Day holiday weekend.

Investors are asking how the U.S. will pay for its programs to revive the economy and stabilize the banking system after a credit rating agency on Thursday issued a warning that Britain's credit rating could be lowered because of its huge debt load.

Those fears spilled over to the U.S., which is also selling debt at a rate of billions per week to bankroll programs aimed at fighting the recession. That helped push the dollar to its weakest level against the euro since January.

Some bright spots kept selling in check. Banks reduced borrowing from the Federal Reserve's emergency loan program over the past week, and investment banks didn't borrow at all during the week the first time that's happened since early September.

Also several retailers posted better-than-expected results including Sears, Gap and Aeropostale Inc.

In the first hour of trading, the Dow Jones industrial average fell 25.80, or 0.3 percent, to 8,266.33. The Standard & Poor's 500 index fell 3.02, or 0.3 percent, to 885.31, and the Nasdaq composite index fell 10.45, or 0.6 percent, to 1,684.80.

Copyright 2009 The Associated Press.