* Energy shares track oil prices lower * Spanish, Italian yields rise on euro zone concerns * U.S. housing sector gauge falls to 4-month low * Indexes off: Dow 1.3 pct, S&P 1.4 pct, Nasdaq 1.2 pct By Rodrigo Campos NEW YORK, May 30 (Reuters) - U.S. stocks tumbled on Wednesday as surging bond yields in Spain and Italy ratcheted up tensions in financial markets about Europe's ability to solve its growing debt crisis. Angst over Europe drove investors away from risky assets and into safe havens. U.S. Treasury benchmark yields fell to their lowest in at least 60 years, prices for crude fell more than 3 percent and the euro dropped below $1.24 to a 23-month low. The S&P 500 has fallen nearly 6 percent in May, heading for its worst monthly performance since September as traders focused on Europe. However, U.S. data later in the week, including first-quarter gross domestic product and monthly payrolls, could delink Wall Street from overseas headlines. Yields rose sharply at an Italian sale of five- and 10-year debt, and investors worried about Spain's plans to raise new funds to shore up its banks even as borrowing costs rose there. "You're seeing the deterioration in Spain gain magnitude and that is worrisome because it involves a larger bailout (than Greece's) and far more capital to alleviate banking problems," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. "Traders and long-term investors believe Europeans are working on solutions. But the ultimate question is will capital markets give them the time before a liquidity issue becomes a solvency issue." Adding to worries was Greece's upcoming election, which could determine if the country will stay or not in the euro zone. More than six issues fell on the New York Stock Exchange for every one that rose. The CBOE volatility index, a gauge of market anxiety, jumped 14.8 percent, its largest daily gain in almost three months. The Dow Jones industrial average lost 160.83 points, or 1.28 percent, to 12,419.86. The S&P 500 Index dropped 19.10 points, or 1.43 percent, to 1,313.32. The Nasdaq Composite fell 33.63 points, or 1.17 percent, to 2,837.36. Facebook shares briefly dropped below $28 to trade more than $10 below their initial public offering price. Shares closed down 2.3 percent at $28.19, their sixth decline in eight days of trading. Energy was the worst performing of the top 10 S&P sectors, down 3 percent, while U.S. crude futures fell 3.5 percent. Oil field service company Halliburton Co fell 5.2 percent to $30.36. The PHLX housing sector index dropped 4.1 percent after U.S. economic data showed contracts of home resales unexpectedly fell in April to a four-month low, dealing a blow to optimism the housing sector may have hit a bottom. U.S.-traded shares of Research In Motion fell 7.8 percent to $10.35 after the BlackBerry maker warned it would likely report a quarterly operating loss. Analysts cut their price targets on RIM shares and said the odds of a turnaround at the company are fading. Shares of Booz Allen Hamilton jumped 13.3 percent to $16.86 after the government consulting firm reported a stronger-than-expected quarterly profit. Pep Boys Manny, Moe & Jack lost a fifth of its market value after private equity firm Gores Group walked away from a $791 million deal to buy the auto parts retailer. Shares closed down 19.8 percent at $8.89. About 6.3 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, below the year-to-date average of about 6.81 billion shares.