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By msnbc.com news services

U.S. stocks are set to fall Tuesday on renewed concerns that Greece and private bondholders would not meet a Thursday deadline to complete a debt swap, potentially opening the way for a messy default.

Greek creditors have until Thursday night to accept a bond swap in which they would lose almost three-quarters of the value of their bonds. A deal is needed for a 130 billion euros bailout that would put the country on more stable footing.

Concerns over the parlous state of Greece's finances come a day after China cut its growth forecast and data showed the European Union is unlikely to avoid a recession.

"With the fresh uncertainties coming into play about Greece and after effects of the Chinese slowdown, investors are taking defensive posture," said Andre Bakhos, director of market analytics at Lek Securities in New York.

Banks and materials shares, sensitive to flare-ups in Europe's debt crisis, fell in early trading, including Bank of America and aluminum producer Alcoa.

European shares hit a 1-week low. The FTSEurofirst 300 index of top European shares was down 1.4 percent. Hong Kong shares suffered their biggest slump in nearly three months as the Hang Seng index lost 2.2 percent.

Yahoo Inc's new chief executive was preparing a significant restructuring of the Internet media company, including thousands of layoffs, according to a technology blog.

El Paso Corp delayed a shareholder vote on the pipeline company's roughly $23 billion acquisition by rival Kinder Morgan Inc to allow investors to consider a judge's ruling that criticized some of the deal's participants.

General Motors Co will pay $423 million for a 7 percent stake in French automaker Peugeot SA as part of an alliance designed to save the companies at least $2 billion.

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Stocks set to fall on Greece, economy fears