* China action deepens worry of short-selling
* GE, Honeywell blame strong dollar for lower revenue
* Indexes down: Dow 1.8 pct, S&P 1.4 pct, Nasdaq 1.8 pct (Updates to late afternoon)
By Caroline Valetkevitch
April 17 (Reuters) - U.S. stocks fell on Friday afternoon, putting the S&P 500 on track for its biggest daily percentage loss since March 25, as concerns over regulations in China, Greece's debt negotiations and disappointing earnings weighed on sentiment.
Selling was broad based with all 10 major S&P 500 sectors losing ground. The S&P Financials index was down 1.5 percent and the S&P Consumer Discretionary index was off by 1.6 percent.
Both Honeywell International and General Electric blamed the strong dollar for lower revenue. Shares of Honeywell were down 1.6 percent at $102.29, while GE shares were up 0.3 percent at $27.35.
Dow component American Express, the world's largest credit card issuer, was the biggest drag on the index. It fell 4.3 percent to $77.37 after revenue missed analysts' estimates, partly due to the currency impact.
Market participants were also concerned Greece could leave the euro zone as it tries to reform its economy and deal with heavy debt. Greece dismissed reports it needed to tap remaining cash reserves to meet salary payments.
"Today, it just seems the wall of worry is higher than it's been in a while because of Greece, oil, earnings and economic data from the past few days," said Jeffrey Carbone, senior partner, Cornerstone Financial Partners, in Cornelius, North Carolina.
At 2:55 p.m., the Dow Jones industrial average fell 327.31 points, or 1.81 percent, to 17,778.46, the S&P 500 lost 29.72 points, or 1.41 percent, to 2,075.27 and the Nasdaq Composite dropped 89.45 points, or 1.79 percent, to 4,918.34.
Chinese authorities lifted restrictions on short-selling while also warning against excessive borrowing on margin, two developments that could pressure that market.
China H-Share index futures fell 3.4 percent. Global equities lost ground as the weakness in China carried through to European markets and then into the United States.
"The restrictions on short-selling have been lifted in China and when one market sneezes, the rest of them usually react," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
The U.S. quarterly earnings season has been mixed so far with more companies beating lowered expectations.
The impact of the stronger dollar on U.S. companies will be highlighted further next week with quarterly reports from United Technologies Corp, 3M Co and Illinois Tool Works Inc.
Declining issues outnumbered advancing ones on the NYSE by 2,540 to 464, and on the Nasdaq, 2,239 issues fell and 500 advanced. The S&P 500 was posting 2 new 52-week highs and 1new low. (Additional reporting by Sinead Carew and Tanya Agrawal in New York; Editing by Bernadette Baum and Nick Zieminski)