* Top-listed Portuguese bank's shares slump 19 percent
* Risky asset bets thinned
* Treasuries gain on fear bidding, long bond off after
* Yen at five-month peak vs euro
(Adds quotes, latest prices)
By Michael Connor
NEW YORK, July 10 Stocks slumped worldwide on
Thursday as investors flocked to safe-haven government bonds on
fears problems at Portugal's biggest listed bank could herald
wider problems for riskier assets.
European stock markets were hit hardest as trading in Banco
Espirito Santo was halted after a 19 percent drop. The
bank's largest shareholder suspended trading in its own shares
and bonds due to "material difficulties" at its own largest
Prices of benchmark U.S. government debt rose and the yen
climbed to a five-month high against the euro as Wall Street
seemed to ignore government jobless claims data that suggested
the U.S. labor market was perking up.
The developments in Europe, following the recent collapse of
a Spanish technology company, buttressed concerns stock
valuations were getting rich after a long streak of gains.
"There are a lot of people looking at the market gains in
conjunction with valuations being pretty full, and trying to
time their exit," said David Joy, chief market strategist at
Ameriprise Financial in Boston, where he helps oversee $771
billion in assets under management.
Joy said the situation in Portugal was simply an excuse for
that to get under way.
"I find it a little bit of a stretch to think that a bank
problem in Portugal is causing this," Joy said. "That may be the
proximate cause of the real near-term weakness."
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 Dow Jones industrial average fell 79.93 points,
or 0.47 percent, to 16,905.68, and the Nasdaq Composite
dropped 14.63 points, or 0.33 percent, to 4,404.41.
Ten-year notes were off their highs but still up
5/32 in price to yield 2.5268 percent. Prices of 30-year bonds
turned lower after relatively weak results at a sale
of $13 billion worth of an existing 30-year bond to be down 6/32
and yield 3.368 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 Israel.
"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 gained 0.73 percent to 137.56 against the euro
, the highest since Feb. 6, and was up 0.50 percent at
101.06 against the dollar, the highest since May 21.
Before the Wall Street open, a plunge of 19 percent in
Portugal's BES drowned out any support from Wednesday's Federal
Reserve minutes, which 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
between 1 and 1.5 percent while Norway's market was down 2
percent. An index of European shares lost 1 percent and
a measure of world markets lost 0.5 percent.
European bank shares were stung. The STOXX Europe 600
Banking Index fell 1.7 percent to its lowest since
Yields rose on bonds issued by southern European governments
at the heart of four years of euro zone turmoil. Greece managed
to place just half of a planned three-billion-euro bond.
Oil prices fell for a ninth session, with Brent
dipping under $108 a barrel in the commodity's longest losing
streak in four years while U.S. light crude slipped 0.16
percent to $102.13, pressured by weak U.S. gasoline demand and
the prospect of rising Libyan supply.
(Reporting by Michael Connor; Editing by Dan Grebler and James