(Refiles to fix typo to read 'sessions' in paragraph 11)
* Facebook buys Oculus for $2 billion; shares fall nearly 7 pct
* King Digital plunges in trading debut
* U.S., EU to work together on tougher Russia sanctions
* Dow off 0.6 pct; S&P 500 off 0.7 pct; Nasdaq off 1.4 pct
By Angela Moon
NEW YORK, March 26 (Reuters) - U.S. stocks fell on Wednesday, led by losses in the technology and materials sectors, as geopolitical concerns rose after the United States and the European Union agreed to work together on tougher sanctions on Russia.
Trading remained choppy with U.S. stocks mostly positive in the morning after U.S. economic data pointed to improving conditions. But the major indexes reversed course in the afternoon as technology stocks turned sharply lower.
Among technology stocks, Facebook was one of the biggest decliners a day after the social networking company said it will acquire two-year-old Oculus VR Inc, a maker of virtual-reality glasses for gaming, for $2 billion. Facebook shares ended down 6.9 percent at $60.39.
The United States and the European Union agreed to work together to prepare possible tougher economic sanctions in response to Russia's behavior in Ukraine. The sanctions could possibly include the energy sector.
U.S. President Barack Obama said after a summit with top EU officials that Russian President Vladimir Putin had miscalculated if he thought he could divide the West or count on its indifference over his annexation of Crimea.
"This could be a non-event if the market wasn't at the level that it is now. Because we are still near a record high, this kind of geopolitical news can make investors more nervous," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
A sharp drop in the stock of King Digital Entertainment Plc , the maker of the wildly popular "Candy Crush Saga" game, also soured investor sentiment.
King's stock fell 15.6 percent to close at $19 in its trading debut on Wednesday after the initial public offering valued the company at about $6 billion. King was the most actively traded stock on the New York Stock Exchange.
The Dow Jones industrial average slipped 98.89 points, or 0.60 percent, to end at 16,268.99. The Standard & Poor's 500 Index dropped 13.06 points, or 0.70 percent, to finish at 1,852.56. The Nasdaq Composite Index fell 60.69 points, or 1.43 percent, to close at 4,173.58.
The CBOE Volatility Index, a widely used gauge of investor sentiment on Wall Street, rose 6.5 percent to end at 14.93. The VIX usually moves inversely to the S&P 500.
Biotech stocks, which have sold off sharply in recent sessions, extended their losses. The Nasdaq biotechnology index slid 1.9 percent to end at 2,455.84.
The S&P materials sector index tumbled 1.4 percent and ranked as the biggest decliner among 10 S&P sector indexes.
The only positive sector was the S&P healthcare sector index , up just 0.1 percent for the day.
Going against the day's downward trend, DirectTV shares shot up 5.7 percent to end at $77.34 and Dish Network Corp shares jumped 6.3 percent to close at $62.09. Dish Chief Executive Officer Charlie Ergen recently contacted DirecTV CEO Mike White to discuss a possible tie-up, Bloomberg reported, citing sources familiar with the matter.
After the bell, the U.S. Federal Reserve objected to plans by Citigroup and four other banks to return capital to shareholders, saying it had uncovered deficiencies during an annual test of their financial robustness.
Citigroup shares fell more than 5 percent in extended-hours trading following the news. The shares had ended the regular session at $50.16, down 0.3 percent.
In the latest look at the U.S. economy, orders for durable goods rose more than expected in February, ending two straight months of declines. Another report showed private-sector economic activity accelerated in March at a faster clip than in February as the services sector picked up, according to financial data firm Markit's preliminary composite Purchasing Managers Index.
Volume of about 7.1 billion shares traded on U.S. exchanges, slightly above the 6.9 billion average so far this month, according to data from BATS Global Markets.
Decliners beat advancers by a ratio of 2 to 1 on the New York Stock Exchange, while on the Nasdaq, nearly four stocks fell for every one that rose.
(Editing by Jan Paschal)