NEW YORK (Reuters) - Bank shares weighed on stocks yesterday as Europe's smoldering debt crisis and fears of an insider trading probe in the US sapped buying interest for most of the session.

The Nasdaq fared better than the Dow and the S&P 500 after upgrades to chipmaker SanDisk Corp. and chip-gear makers Amkor Technology Inc and Teradyne Inc.

Risk aversion kicked in as stocks followed the euro's fall against the US dollar after turmoil in Ireland's fragile coalition government overshadowed an agreed-on bailout of the country.

Investors fear the crisis will spread throughout Europe, raising the specter of losses by exposed US banks. The KBW bank index lost 1.5 percent and Dow component JPMorgan Chase & Co. fell 2.3 percent to $38.51.

"All the continued concerns coming out of Europe and the debt situation there is what got us started on the way down today," said Tom Schrader, managing director of US equity trading at Stifel Nicolaus Capital Markets in Baltimore.

Worry about a broad insider trading probe in the US hit shares of large brokerages and Goldman Sachs Group fell 3.4 percent to $161.05.

"The situation on insider trading put some more fuel on the fire for short-term trading in the afternoon," said Mr. Schrader, who added the concerns were "probably a gross over-reaction" to the insider trading probe.

The Dow Jones industrial average fell 24.97 points, or 0.22 percent, to 11,178.58. The Standard & Poor's 500 Index dipped 1.89 points, or 0.16 percent, to 1,197.84. But the Nasdaq Composite Index gained 13.9 points, or 0.55 percent, to 2,532.02.

Ireland's unpopular coalition government began to crumble a day after agreeing on an European Union/International Monetary Fund bailout, casting doubt on its ability to push through an austerity budget crucial to receiving assistance.

US-listed shares of Bank of Ireland tumbled 16.9 percent to $2.22, and those of Allied Irish Banks Plc lost 9.8 percent to $1.11. Both have lost nearly half their market value since August 1.

The S&P energy index bounced from a more than 2.2 percent decline to close down 0.4 percent after US light crude futures capped losses, trading at $81.72 per barrel after earlier falling below $81.

Chipmaker SanDisk gained 6.5 percent to $42.57 after Robert W Baird upgraded the stock to "outperform" from "neutral", while Amkor jumped six percent to $6.86 and Teradyne added 5.7 percent to $12.53 after Citigroup raised its rating on both shares.

The PHLX Semiconductor Index added 1.1 percent to close at 391.33.

Leadership from semiconductors may find a near-term hurdle as the SOX index approaches the 395 area, a six-month high hit earlier this month. The index's 2010 high, near 405, was hit in late April.

With relative momentum and strength readings near overbought levels, a pullback in the sector is in the charts. However, the uptrend that has seen the SOX rise more than 28 percent from a low hit late August is still in place.

Also boosting the Nasdaq, Netflix Inc jumped 8.8 percent to $188.32 after it said it will offer an unlimited streaming-only subscription plan in the US and it raised prices in some of its plans.

About 7.04 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below the year-to-date average of 8.69 billion.

Advancing stocks slightly outnumbered declining ones on the NYSE by 1,520 to 1,453, while on the Nasdaq, 1,336 stocks rose and 1,303 fell.