* Portugal bonds, stocks slide as political crisis deepens * European shares fall 1.2 percent, periphery bonds tumble * Wall Street expected to open lower, ADP report bright * Asian stocks fall as China services growth hits nine-month low * Oil rises on worries over Mideast tensions By Marc Jones LONDON, July 3 Portugal's 10-year bond yield shot above 8 percent and stock markets across Europe tumbled on Wednesday as deepening political turmoil in the bailed-out euro zone member threatened to reignite the bloc's crisis. Signs that Chinese growth is slowing also weighed on shares, while oil jumped to a 14-month high on fears that unrest in Egypt could unsettle the Middle East and disrupt crude supply. U.S. stock index futures pointed to early falls for Wall Street too, with traders eyeing a trio of economic data releases which could give some insight into the strength of Friday's closely-watched payroll report. The prospect of more resignations from Portugal's government after this week's surprise departure of its finance minister dominated European trading, however, amid worries it could lead to snap elections and derail its post-EU/IMF bailout recovery. Portuguese 10-year bond yields topped 8 percent and its stock market dropped 6 percent to lead the list of fallers across European and Asian markets. "Something had to happen, two months in a row with no action in the euro zone is very unusual," said Uwe Zöllner, head of Pan-European equities at Franklin Equity Group. "People are nervous at the moment anyway. We have seen a good start to the year and now we get the mixed data from China, and we see headlines again about political unrest in oil-producing countries, so people are probably taking the news from Portugal worse than they otherwise would have done." Spanish and Italian yields also rose and the cost of insuring periphery debt against default jumped, with nervousness over whether Greece will receive its next tranche of bailout money adding to fears the debt crisis will erupt again. The broad sell-off in riskier European assets had largely stabilised by 1300 GMT, leaving the region's FTSEurofirst 300 share index off its lows but still down 1 percent while the euro was hovering at its lowest level since late May. CHINA WEIGHS The day had got off to a downbeat start, with Asian stock markets falling after official Chinese figures showed growth in the services sector sagged to its weakest pace in nine months, adding to signs of a slowdown in the world's No. 2 economy. Growing unrest in Egypt and fears it could disrupt Middle East supplies drove oil prices higher for a third day, sending U.S. crude above $100 barrel for the first time in 14 months. The Egyptian military has set a deadline of about 5:00 p.m. local time (1500 GMT) for President Mohamed Mursi to agree to a power-sharing deal with his rivals, an ultimatum that Mursi has firmly rejected. Traders are also expecting data due later to show a sharp drop in crude oil stocks held by top consumer the United States. "Middle East tensions are always going to put a cushion under the price while there is some tight supply going on in the U.S.," Ben Le Brun, a markets analyst at OptionsXpress in Sydney, said. "It's double-positive news for crude." U.S. LIFTS Countering the softer China numbers, U.S. traders prepared for a shortened pre-July 4 session and the payrolls data on Friday with figures showing firms stepped up hiring in June and new applications for unemployment benefits fell. The first rise in European retail sales for four months and a more-than-one-year high for Markit's final composite Euro zone Purchasing Managers' Index (PMI) pointed to stabilisation too, but it could not overcome the concerns over Portugal and Greece. Investors were instead heading for traditional safe-haven assets, like German Bunds, the dollar and the yen The dollar hit a one-month high against a basket of major currencies before a slight dip, but stayed firm after a recent string of generally solid U.S. economic data supported the view that the Fed could scale back its stimulus later this year. The dollar index, which measures the greenback's value against a basket of major currencies, rose to as high as 83.635, the highest since late May, while Portugal's troubles pushed the euro to $1.2923, its lowest in over a month. "Portugal is by far the biggest focus," said Derek Halpenny, European Head of Global Currency Research at BTMU. "For the euro this is a slow grind lower ... The euro has been fairly resilient against the dollar and the market will initially treat this with caution but it is clearly a euro negative."