GLOBAL MARKETS-Stocks resume downward trend; U.S. bonds rally

Reuters - UK Focus

* Greece makes successful return to bond markets

* U.S. jobless claims report unexpectedly strong

* Wall Street, dollar get little lift from jobs data (Adds New York trading; changes byline; dateline previouslyLONDON)

By Michael Connor

NEW YORK (Frankfurt: HX6.F - news) , April 10 (Reuters) - U.S. and European equitymarkets resumed their downward trend on Thursday, drivinginvestors into safe-haven government bonds, while Greece'smuch-heralded return to the bond market buoyed euro zone debt.

The benchmark 10-year U.S. Treasury yield fell to its lowestlevel since the beginning of March. On Wall Street, technology and biotech shares led the way lower, as investors continue toquestion whether high-flying momentum names have come too far,too fast.

Greece staged a triumphant return to the bond market justtwo years after its default placed it at the center of the eurozone debt crisis.

Greece drew solid demand at its five-year bond sale, whichaimed to raise 3 billion euros and offered a yield of 4.95percent, beating Athens' 5 percent target. It had been expectedto draw in U.S. investors including hedge funds.

Greece's deputy prime minister, Evangelos Venizelos, saidthe sale was at least eight times oversubscribed. Investorslooked to the deal as further evidence that the euro zone'seconomic recovery is gathering pace.

"It's not a particularly cheap deal for them, but they areon the right track and it shows the debt crisis has easedsignificantly," said Commerzbank (Xetra: CBK100 - news) strategist Michael Leister.

Wall Street sagged as investors rotated back into defensivenames and sold momentum-driven stocks, and European equitymarkets fell in tandem.

On Wednesday, U.S. stocks bounced after dovish commentaryfrom the Federal Reserve's minutes from its March meeting. Thathelped shares in Asia rally overnight and bolstered Europeanequities for a time.

Wall Street's Dow Jones industrial average fell 60.34points, or 0.37 percent, to 16,376.84, the S&P 500 lost11.66 points, or 0.62 percent, to 1,860.52, and the NasdaqComposite dropped 61.438 points, or 1.47 percent, to4,122.462.

The global MSCI All-Country World index wasdown 0.2 percent. The FTSEurofirst 300 index of leadingEuropean companies lost 0.6 percent, shedding earlier gains.

European shares felt the sting of weak economic data, withItaly reporting softer-than-expected industrial output while adiscounted share placement by Iberdrola (Other OTC: IBDRY - news) triggered aselloff in Spanish utilities.

U.S. Treasuries rallied on the weakness in stocks ahead ofan auction of $13 billion auction of 30-year bonds. The 10-yearTreasury note rose 14/32 to drop its yield to 2.639percent.

Initial jobless claims declined to a surprising seven-yearlow on Thursday, to a seasonally adjusted 300,000 for the weekended April 5.

"It's collaborating with the other signals we have beenseeing, which is the jobs market is slowly improving," said RyanSweet, a senior economist at Moody's Analytics in West Chester,Pennsylvania.

The Fed minutes took a toll on the U.S. dollar on Thursday,sending the greenback to three-week lows against the yen and theSwiss franc, as investors who had positioned for a gradualtightening in monetary policy were driven to reverse course.

The dollar has fallen versus the yen in four of thelast five trading days. Against the Swiss franc, thedollar weakened for a fourth straight session.

"The minutes were laced with dovish undertones," said ScottSmith, senior FX trader and market analyst, at Cambridge (SES: E1:J91U.SI - news)Mercantile Group in Calgary, sending "market participants into a'risk-on' buying frenzy."

The dollar was down 0.3 percent versus the yen at 101.64yen, having fallen to 101.39, its lowest level since March 19.The dollar slipped against the Swiss franc to 0.8768 franc, itslowest in three weeks.

A drop in China's exports stoked concerns about demand inthe world's second-biggest economy and pushed the oil price downtoward $107 a barrel. OPEC also lowered its 2014 forecast of oildemand.

The fall in Chinese exports last month marked the first timethey have declined for two months in a row since 2009.

Gold rose and touched a 2-1/2-week high as the dollardropped. Spot gold hit its highest level since March 24at $1,324.40 an ounce earlier, before easing to $1320.30, a gainfor the day of 0.56 percent.

(Reporting by Michael Connor in New York; Additional reportingby Sudip Kar-Gupta in London and Gertrude Chavez-Dreyfuss, ChuckMikolajczak and Richard Leong in New York; Editing by LeslieAdler)

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