* Treasuries, gold gain on fear bidding
* Top-listed Portuguese bank's shares slump 19 percent
* Risky asset bets thinned, but U.S. stocks rebound from
* Yen at five-month high vs euro
(Adds closing prices, gold)
By Michael Connor
NEW YORK, July 10 Stocks slumped worldwide on
Thursday and investors flocked to safe-haven government bonds
and gold on fears problems at Portugal's biggest listed bank
could herald a wider slump 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, the yen
climbed to a five-month high against the euro and gold hit a
three-and-a-half month high. The developments in Europe,
following the recent collapse of a Spanish technology company,
buttressed concerns that 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.
He 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.
Many U.S. stock market participants have called for a
pullback, with the S&P 500 without a daily decline of 1
percent or more since April 10.
The S&P 500 index of top U.S. companies briefly traded down
1 percent. But it recovered substantially and closed 8.15
points, or 0.41 percent, at 1,964.68. The Dow Jones industrial
average fell 70.54 points, or 0.42 percent, to end at
16,915.07. The Nasdaq Composite dropped 22.83 points, or
0.52 percent, to close unofficially at 4,396.20.
Small-cap names were harder hit, with the Russell 2000
Index of small stocks falling 1 percent.
Ten-year U.S. Treasury notes were off their
highs but still up 1/32 in price to yield 2.539 percent. Prices
of 30-year bonds turned lower after relatively weak
results at a sale of $13 billion worth of an existing 30-year
bonds and finished down 6/32 to yield 3.372 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 0.67 percent to 137.71 against the euro
, the highest since Feb. 6, and was up 0.40 percent at
101.25 against the dollar, the highest since May 21.
Gold surged to 3-1/2 month highs. By 3:20 p.m. EDT (1715
GMT), the spot price of bullion was up 0.7 percent at
$1,335.40 an ounce, after racing to $1,345.00, its highest since
Oil prices initially were pressured by weak U.S. gasoline
demand and the prospect of rising Libyan supply. But Brent crude
rebounded slightly after eight days of losses and U.S. crude
recovered from a nine-day losing streak.
Brent gained 39 cents to settle at $108.67 a
barrel. U.S. crude gained 64 cents to settle at $102.93 a
(Reporting by Michael Connor; Editing by Dan Grebler and James