| NEW YORK
NEW YORK Global equity markets slid on Wednesday on worries over signs of slowing growth in China and deepening political turmoil in Portugal, where talks over the government's future weighed on the euro and threatened to reignite the euro zone crisis.
U.S. stocks bucked the trend, however, rising in a shortened session ahead of the Independence Day holiday after see-sawing on news of surprisingly strong private sector job creation and data showing unexpectedly weak growth in the services sector.
Portugal's 10-year bond yield shot above 8 percent and its stock market slumped 5 percent on fears a snap election could derail Lisbon's exit next year from a bailout by the European Union and International Monetary Fund.
Concerns over Greece's ability to fulfill the conditions of its bailout also raised the prospect of a reawakened debt crisis in the 'peripheral' countries of the euro zone.
U.S. oil prices, meanwhile, hit a 14-month high on fears unrest in Egypt could destabilize the Middle East and spark supply disruptions. Gold rose more than 1 percent as the dollar and equity markets remained under pressure.
The political crisis in Portugal led the country's bourse to post its worst day in two years and dragged banking shares down, the biggest contributor to declining European stocks. Portuguese stocks .PSI20 closed down 5.3 percent.
Euro zone banks .SX7E fell 1.8 percent and the broad FTSEurofirst 300 .FTEU3 of leading European shares fell 0.68 percent to close at 1,150.90.
MSCI's all-country world equity index .MIWD00000PUS fell 0.47 percent, paring some losses as stocks on Wall Street rose, while its gauge of emerging markets .MSCIEF fell 2.1 percent.
The Dow Jones industrial average .DJI closed up 56.14 points, or 0.38 percent, at 14,988.55. The Standard & Poor's 500 Index .SPX rose 1.33 points, or 0.08 percent, at 1,615.41. The Nasdaq Composite Index .IXIC gained 10.27 points, or 0.30 percent, at 3,443.67.
U.S. private employers stepped up hiring in June, and new applications for unemployment benefits fell for a second straight week last week, pointing to a steadily improving labor market.
Private payrolls increased by 188,000, up from the 134,000 jobs added in May, the ADP National Employment Report showed. Economists polled by Reuters had expected a gain of 160,000.
But the Institute for Supply Management said its services index fell to 52.2 in June from 53.7 in May, confounding economists' median forecast for a gain to 54. While a reading above 50 indicates expansion, growth was at its lowest since February 2010.
"We do tend to rally into the holiday, especially the July 4th holiday," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.
"That ADP number took some of the fear out of Friday's payroll number, told us you can stay long into Friday, at least that's what some of the participants are going to do."
U.S. equities were whip-lashed on light volume as many market participants were out of the office ahead of Thursday's holiday. U.S. equity and bonds markets closed early on Wednesday and will reopen on Friday.
Chinese shares fell after a read on the country's services sector compounded concerns about slowing growth momentum.
The yen rose across the board as political wrangling in Portugal and Egypt prompted investors to seek refuge in the Japanese currency, although it trimmed gains against the dollar after the data showing a stabilizing U.S. labor market.
"The unresolved situation in Egypt and the government resignations in Portugal are an issue," said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities in New York.
"We're not only seeing some of the G10 currencies weaken, but also emerging market currencies," Bennenbroek said.
The dollar fell 0.7 percent to 99.92 yen. The euro was also hit, down 0.49 percent at 129.95 yen.
Trading in government bond markets also was rocky.
The benchmark 10-year U.S. Treasury note was down 9/32 in price to yield 2.5032 percent in see-saw trade.
German Bund futures pared gains after the ADP U.S. private sector jobs data.
Bund futures settled 57 ticks higher on the day at 142.26, having traded around 142.43 before the data.
Crude oil prices rose on a sharp decline in stockpiles in top consumer the United States and the evolving unrest in Egypt.
While U.S. crude pushed above $101 a barrel, for a weekly rally of nearly 5 percent, many traders were still fixated on ructions in key spreads trade. The premium of European Brent crude over U.S. WTI touched its highest since 2010, before beginning to unwind amid an easing short squeeze.
U.S. weekly inventory data showing stockpiles fell by more than 10 million barrels, the biggest drop for this time of year in nearly 13 years, added to gains fueled by worries sparked by the unrest in Egypt.
U.S. oil was up $1.65 at $101.25 a barrel, having touched $102.18 in earlier trade. Brent rose $1.75 to $105.75.
(Additional reporting by Marc Jones in London; Editing by Chizu Nomiyama, James Dalgleish and Dan Grebler)