GLOBAL MARKETS-Wall St drops as tech shares sell off; U.S. bonds jump

Reuters - UK Focus

* Nasdaq losses top 3 percent

* Dow, S&P down more than 1 percent

* U.S. jobless claims report unexpectedly strong

* Dollar gets little lift from jobs data

* Greece makes successful return to bond markets (Updates U.S. markets to close)

By Michael Connor

NEW YORK (Frankfurt: HX6.F - news) , April 10 (Reuters) - Wall Street stocks tumbled onThursday as investors exited technology and biotech shares,extending recent weakness and knocking the Nasdaq down by morethan 3 percent.

The technology-heavy Nasdaq stock index posted its worstsingle-day drop since 2011, and yields on the benchmark 10-yearU.S. Treasury note fell to their lowest since February 27 asinvestors sought shelter in government debt.

Across the Atlantic (Frankfurt: 98S.F - news) , Greece returned to world credit marketsfor the first time since its financial crisis by sellingjunk-rated bonds to global investors chasing fat yields.

After a broad rally on Wednesday, U.S. tech shares led theway lower on Thursday as investors questioned whetherhigh-flying momentum stocks such as TripAdvisor (NasdaqGS: TRIP - news) areovervalued.

"Things are very fragile, and there's a lot of nervousnessout there," said Michael James, managing director of equitytrading at Wedbush Securities in Los Angeles.

Wall Street dropped even after the Labor Departmentreported U.S. weekly jobless claims fell to a seven-year low,indicating ongoing recovery in the labor market and the economy.

"The rotation is out of some of the higher-growth,higher-momentum areas of the market, and until we get earningsvisibility, we could see protracted weakness," said Eric Teal,chief investment officer at First Citizens Bancshares Inc (NasdaqGS: FCNCA - news) inRaleigh, North Carolina, which manages $3.5 billion.

The Nasdaq index, which is heavily composed oftechnology company shares, fell 3.1 percent in its largest dailypercentage drop since November 9, 2011.

Wall Street's Dow Jones industrial average fell266.96 points, or 1.62 percent, to 16,170.22 and the S&P 500 lost 39 points, or 2 percent, to 1,833.09.

The S&P technology sector fell 2.5 percent, whilethe Nasdaq biotechnology index plunged 5.6 percent.

U.S. Treasuries rallied on the weakness in stocks. Thebenchmark 10-year Treasury note rose 17/32 to dropits yield to 2.623 percent, while the 30-year bond jumped 1-6/32 to yield at 3.501 percent.

European equity markets, which started the day stronger,fell in tandem with Wall Street.

But Greece staged a triumphant return to the bond marketjust two years after its default placed it at the center of theeuro zone debt crisis.

Greece drew solid demand at its five-year bond sale, whichaimed to raise three 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 the euro zone's economicrecovery 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.

The global MSCI All-Country World index wasdown nearly 1 percent. The FTSEurofirst 300 index ofleading European companies lost 0.5 percent, shedding earliergains.

The Federal Reserve, whose policy-makers on Wednesdayreleased minutes of a recent meeting, on Thursday bought $3.223billion of Treasuries maturing June 2018 through December 2018as part of its economic stimulus program.

Initial U.S. jobless claims declined by 32,000 to aseasonally adjusted 300,000 for the week ended 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 dollar on Thursday,sending the greenback to lows against the yen and the Swissfranc not seen in weeks, as investors who had positioned for agradual tightening in monetary policy reversed course.

The dollar has fallen versus the yen in four of the lastfive trading days and on Thursday neared a four-week low .Against the Swiss franc, the dollar weakened for a fourthstraight session and stood at a low last seen on March 19.

"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 0.5 percent versus the yen at101.41 yen, having fallen to 101.39, its lowest since March 19.The dollar slipped against the Swiss franc to 0.8753franc, its lowest in three weeks.

The dollar index hit a three-week low of 79.330, wellbelow a seven-week high of 80.599 set only last Friday. It laststood at 79.378, down 0.1 percent on the day.

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

Brent crude fell 54 cents to $107.44 a barrel, aftergaining $2.16 over the previous two days.

Gold hit a 2-1/2-week high as the dollar dropped. Spot gold hit its highest since March 24 at $1,324.40 an ouncebefore easing to $1320.20, a gain for the day of 0.55 percent. (Reporting by Michael Connor in New York; Additional reportingby Sudip Kar-Gupta in London and Gertrude Chavez-Dreyfuss, RyanVlastelica, Chuck Mikolajczak and Richard Leong in New York;Editing by Leslie Adler, James Dalgleish and Meredith Mazzilli)

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