NEW YORK - The stock market was poised to end August with a sharp drop as worries about the world economy reappeared.

Major stock indicators fell at least 1 percent in early afternoon trading Monday after a 6.7 percent plunge in China's main index that also prompted selling in other countries. The decline in stocks was broad, but the biggest losses were among energy and material companies as prices for commodities like crude and copper plummeted.

The selling of Chinese shares has been fed by concerns over a tightening in bank lending that could hurt that country's economy. China, which has continued to grow despite the global recession, is a major consumer of U.S. exports including commodities. Chinese stockpiling this year of such goods as copper and soy have helped drive up commodities prices.

"As China goes, so goes a lot of the rest of the world," said Brian Nick, investment strategist at Barclays Wealth.

The sell-off in China rattled investors who were already on edge going in to the last trading day of August. With stocks up more than 45 percent since early March, investors are worried that the market may have gotten too far ahead of the economy. Key reports later this week on manufacturing and employment in August could either upset the market's six-month rally or help push it forward.

Without evidence of actual economic growth, analysts have warned that the market's rally could fizzle in the coming weeks, especially as traders head into September, historically a rough month for the stock market.

"The markets have been looking like they've been somewhat reluctant to hold their gains over the last couple of sessions," said Blaze Tankersley, chief market strategist at Bay Crest Partners, adding that the news out of China provided investors with a good excuse to sell some stocks.

In the final hour of trading, the Dow Jones industrial average fell 76.41, or 0.8 percent, to 9,467.79. The Standard & Poor's 500 index fell 10.78, or 1.1 percent, to 1,018.15, while the Nasdaq composite index fell 24.79, or 1.2 percent, to 2,003.98.

Four stocks fell for every one that rose on the New York Stock Exchange, where volume came to a light 770.5 million shares, compared with 833.1 million at the same time on Friday. Light volume can skew price moves. It is typically light in late summer as some traders take vacations.

Japan's Nikkei stock average fell 0.4 percent after the country's opposition party came to power in a landslide victory. Germany's DAX index fell 0.9 percent, while France's CAC-40 lost 1.1 percent. The London Stock Exchange was closed for a holiday.