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* Asian markets weighed by losses in U.S., European stocks
* Yen and safe-haven bonds bid on Portuguese bank troubles
* Mood cautious as U.S. earnings season gets underway
By Wayne Cole
SYDNEY, July 11 (Reuters) - Asian share markets slipped on Friday as troubles at a small Portuguese bank managed to wrongfoot investors already made anxious by the U.S. earnings season and a spate of disappointing economic data globally.
Tensions in the Middle East also continued to simmer with Israeli officials seeming to hint at a possible assault on Gaza by ground forces.
As a result, yields on safe-haven U.S. and German debt fell, the yen scaled a five-month peak against the euro and gold hit a three-and-a-half month high.
Japan's Nikkei fell 0.7 percent, while Australia eased 0.4 percent. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent.
Analysts emphasised that the woes of one Portuguese bank were no threat to the sovereign's rating and rather the news served as an excuse to book profits on what has been a long rally in European stocks and bonds.
Indeed, there were signs investors were taking money out of peripheral euro zone debt and seeking higher returns in the emerging world. It was notable that MSCI's index of emerging market stocks actually rose on Thursday having hit a 17-month peak earlier in the week.
In contrast, European stocks were buffeted 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 shareholder.
The damage was all the greater as data showed unsettlingly weak readings for May industrial production in France and Italy. These followed equally disappointing numbers from Germany and the UK, which has led many analysts to cut their estimates of economic growth for the second quarter.
Portugal's market fell 4.2 percent and Italy's FTSE MIB 1.9 percent, pulling down the European index by 0.78 percent.
While the fate of a relatively minor bank in Europe would not normally have had much affect on Wall Street, it was enough to make investors reconsider the market's high valuations as the earnings season gets into full swing.
The S&P 500 index fell 0.41 percent, while the Dow eased 0.42 percent and the Nasdaq 0.52 percent.
The S&P 500 financial sector index fell 0.5 percent and Wells Fargo & Co, which reports earnings later Friday, lost 0.7 percent.
With stocks off the boil, Treasuries picked up the usual safe-haven bid for shorter-term debt which is prized for its deep liquidity. Yields on two-year notes fell over 4 basis points to 0.4561 percent, a marked reversal from a high of 0.5360 percent hit just on Wednesday.
German debt played much the same role in Europe, where yields on 10-year bund yields ended at a 14-month trough of 1.20 percent. Bonds in the euro zone periphery were not so lucky, with yields on Portuguese, Spanish and Italian paper all rising sharply.
The itch for safety benefited the Japanese yen which climbed a full yen to 137.76 per euro. The dollar dipped to 101.26 yen even as it gained on the euro to $1.3599 .
Yet the higher-yielding Australian and New Zealand dollars remained well supported, again suggesting there was no widespread retreat from risky assets.
In commodities, gold was up at $1,336.01 having touched a 3-1/2 month top of $1,345.00.
Oil prices fell anew after a brief rally on Thursday. Brent was off 13 cents at $108.54 a barrel, while U.S. crude eased 16 cents to $102.77. (Editing by Eric Meijer)