Wall Street falls on fiscal cliff setback

NEW YORK (REUTERS) - United States (US) stocks finished lower on Friday after a Republican plan to avoid the "fiscal cliff" failed to gain sufficient support on Thursday night, draining hopes that a deal would be reached before 2013.

Still, stocks managed to rebound from the day's lows near the end of the session, and for the week, major averages still ended higher, with the S&P 500 gaining 1.2 per cent.

Trading was volatile as confidence eroded in the prospect of a deal out of Washington, and in part due to quarterly expiration of options and futures contracts. The CBOE Volatility Index or VIX, the market's favored anxiety measure, finished below its high of the day.

Republican House Speaker John Boehner failed to garner enough votes from even his own party to pass his "Plan B" tax bill late on Thursday. It was the latest setback in negotiations to avoid $600 billion in tax hikes and spending cuts that some say could tip the US economy into recession.