* Fed chief plays down chances of further stimulus
* European stocks fall 1 pct on Bernanke disappointment
* U.S. slowdown continues to hamper dollar, yen gains
* Oil falls as market awaits OPEC production targets
(Adds quote, detail, updates prices)
By Neal Armstrong
LONDON, June 8 (Reuters) - European stocks fell on Wednesday and the dollar dropped to a one-month low against the yen after U.S. Federal Reserve Chairman Ben Bernanke offered a grim view of the economy but failed to offer hints of fresh stimulus.
Concerns about growth in the world’s largest economy have dominated financial markets this month, and European stocks fell to their lowest levels since mid-March, driving global stocks 0.5 percent lower on the day. .MIWD00000PUS
U.S. equity futures were down 0.4 percent at 1,279.00. SPc1
Bernanke acknowledged the U.S. economy had slowed down but offered no suggestion the central bank was willing to step in with a third round of bond buying -- a form of quantitative easing -- to support growth. The dollar fell in response. [ID:nW1E7GV010]
“QE3 looks as though it’s become a distant hope. The markets had pinned quite a lot on getting another form of stimulus,” said Justin Urquhart Stewart, director at Seven Investment Management.
The FTSEurofirst 300 .FTEU3 index of top European shares was down 1 percent at 1,093.32 points, plumbing a two-and-a-half month low and a sixth straight day of losses.
Uncertainty over whether European policymakers will manage to pin down a deal for further financial aid for Greece also hampered sentiment towards the euro zone.
The euro EUR= briefly rose to a one-month high of $1.4696 in Asia as the dollar floundered, but later eased to $1.4648, off around 0.3 percent for the day, knocked by a slump in German exports and a fall in industrial output. [ID:nB4E7GN03F]
The cost of insuring Greek and Portuguese debt against default rose as investors fretted over the possibility of a Greek debt restructuring and due to the risk aversion sweeping through markets. [ID:nLDE7570J6]
German government Bunds rose around 13 ticks FGBLU1, though outperformance in U.S. Treasuries overnight saw the yield on 10-year U.S. paper fall to 9 basis points below that of Bunds, the most in a year.
“Bernanke was dovish and it’s the U.S. data that will set the tone from here,” said one bonds trader. “We’re not out of the woods with the euro zone periphery either and the last thing they need is a slow-down in growth.”
Greece needs substantial fresh aid from the euro zone to avoid the currency bloc’s first state insolvency, a German newspaper reported on Tuesday, citing German Finance Minister Wolfgang Schaeuble. [ID:nB4E7G900O]
The dollar hovered near a one-month low under 80 yen JPY= as the Japanese currency firmed on the heightened risk-aversion reflected in falls in share prices. The dollar index was also within sight of one-month lows of 73.506 hit on Tuesday .DXY
Poor signs on growth add to market conviction that U.S. interest rates will stay low for an extended period, while the European Central Bank is expected to signal on Thursday it will push forward with a further rise in interest rates next month.
Brent crude LCOc1 fell 0.5 percent to $116.36 a barrel, after gaining $2.30 on Tuesday. Investors are trying to assess whether OPEC will raise production targets at a meeting in Vienna.
“Oil prices have been softening this morning on the back of expectations that today’s OPEC meeting could bring a increase in production to match estimates of growth in oil demand,” said Jane Foley, senior currency analyst at Rabobank.
“High commodities prices are being associated with soft U.S. growth and since QE may be a factor behind the acceleration in prices in this sector, the outlook for oil prices is a crucial element in policymakers’ decisions.” she added.
Additional reporting by Nick Macfie, Brian Gorman and Kirsten Donovan; editing by Patrick Graham/Ruth Pitchford