GLOBAL MARKETS-Wall St sinks on Portugal woes; U.S. debt, yen gain

Thu Jul 10, 2014 11:13am EDT

* U.S. stocks shrug off bullish jobless data

* Shares of top-listed Portuguese bank BES fall 15 pct

* Treasuries gain on fear bidding

* Yen at 5-month peak vs euro (Adds New York stocks sell-off, other market moves; changes dateline; previous LONDON)

By Michael Connor

NEW YORK, July 10 (Reuters) - U.S. stocks fell on Thursday, joining a European sell-off driven by troubles at Portugal's biggest listed bank, while prices of U.S. government debt rose and the Japanese yen climbed to a five-month high against the euro.

Wall Street seemed to ignore government jobless claims data that suggested the U.S. labor market was perking up.

Many U.S. stock market participants have called for a pullback, with the S&P 500 yet to see a daily decline of 1 percent or more since April 10. The Standard & Poor's 500 Index was down 9.64 points, or 0.49 percent, at 1,963.19.

The Dow Jones industrial average lost 90.24 points, or 0.53 percent, at 16,895.37. The Nasdaq Composite Index was down 27.60 points, or 0.62 percent, at 4,391.43.

Prices of U.S. Treasuries rose, taking benchmark yields to their lowest in five weeks as investors, eyeing Europe, scrambled for low-risk bonds.

Ten-year notes were off their highs but up 8/32 in price to yield 2.5142 percent. Prices of 30-year bonds rose 20/32, yielding 3.343 percent.

Treasuries have rallied this week on a global drop in stock prices, weak economic data in Italy and elsewhere overseas, and intensified fighting between militants in Gaza and the Israeli military.

"There's a lot of reasons to find comfort in Treasuries right now," said Mike Lorizio, head of Treasuries trading at John Hancock Asset Management in Boston.

The yen hit a five-month high against the euro and an almost two-month high against the dollar. The yen gained 0.73 percent to 137.56 against the euro, the highest since February 6, and was up 0.50 percent at 101.06 against the dollar, the highest since May 21.

"We're seeing some problems coming out of Europe," said Sireen Harajli, a foreign exchange strategist at Mizuho Corporate Bank in New York. "Markets are selling euros and buying safe havens like the Japanese yen."

Before the Wall Street open, the plunge in Portugal's BES drowned out any support from Wednesday's Federal Reserve minutes. The minutes were seen as showing the U.S. central bank no closer to an outright rise in interest rates.

Stock markets in Germany and France fell around 1.5 percent while Norway's market, hurt by poor results at its biggest commercial lender, was down 2 percent. An index of European shares lost 0.78 percent, while a measure of world markets lost 0.55 percent.

Yields on bonds issued by the southern European governments at the heart of four years of turmoil for the euro zone rose across the board. Greece managed to place just half of a planned 3 billion euro bond placement.

Shares in Portugal's Banco Espirito Santo plunged more than 15 percent.

"It is not ideal timing given all the concerns the market has on Portugal," said Michael Michaelides, a rates analyst at RBS in London.

Oil prices were lower for a ninth session, with Brent nearing $108 a barrel in the commodity's longest losing streak in four years and U.S. light crude off 0.18 percent at $102.11. Prices were pressured by weak U.S. gasoline demand and the prospect of rising supply from Libya. (Reporting by Michael Connor; Editing by Dan Grebler)

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