GLOBAL MARKETS-Wall St sinks on Portugal woes; U.S. debt, yen gain

Reuters - UK Focus

* U.S. stocks shrug off bullish jobless data

* Shares (Frankfurt: DI6.F - news) of top-listed Portuguese bank BES fall 15 pct

* Treasuries gain on fear bidding

* Yen at 5-month peak vs euro (Adds New York stocks sell-off, other market moves; changesdateline; previous LONDON)

By Michael Connor

NEW YORK, July 10 (Reuters) - U.S. stocks fell on Thursday,joining a European sell-off driven by troubles at Portugal'sbiggest listed bank, while prices of U.S. government debt roseand the Japanese yen climbed to a five-month high against theeuro.

Wall Street seemed to ignore government jobless claims datathat suggested the U.S. labor market was perking up.

Many U.S. stock market participants have called for apullback, with the S&P 500 yet to see a daily decline of 1percent or more since April 10. The Standard & Poor's 500 Index was down 9.64 points, or 0.49 percent, at 1,963.19.

The Dow Jones industrial average lost 90.24 points,or 0.53 percent, at 16,895.37. The Nasdaq Composite Index was down 27.60 points, or 0.62 percent, at 4,391.43.

Prices of U.S. Treasuries rose, taking benchmark yields to their lowest in five weeks as investors, eyeing Europe,scrambled for low-risk bonds.

Ten-year notes were off their highs but up 8/32in price to yield 2.5142 percent. Prices of 30-year bonds rose 20/32, yielding 3.343 percent.

Treasuries have rallied this week on a global drop in stockprices, weak economic data in Italy and elsewhere overseas, andintensified fighting between militants in Gaza and the Israelimilitary.

"There's a lot of reasons to find comfort in Treasuriesright now," said Mike Lorizio, head of Treasuries trading atJohn Hancock Asset Management in Boston.

The yen hit a five-month high against the euro and an almost two-month high against the dollar. The yen gained0.73 percent to 137.56 against the euro, the highestsince February 6, and was up 0.50 percent at 101.06 against thedollar, the highest since May 21.

"We're seeing some problems coming out of Europe," saidSireen Harajli, a foreign exchange strategist at MizuhoCorporate Bank in New York. "Markets are selling euros andbuying safe havens like the Japanese yen."

Before the Wall Street open, the plunge in Portugal's BESdrowned out any support from Wednesday's Federal Reserveminutes. The minutes were seen as showing the U.S. central bankno closer to an outright rise in interest rates.

Stock markets in Germany and France fellaround 1.5 percent while Norway's market, hurt by poor resultsat its biggest commercial lender, was down 2 percent. An indexof European shares lost 0.78 percent, while a measureof world markets lost 0.55 percent.

Yields on bonds issued by the southern European governmentsat the heart of four years of turmoil for the euro zone roseacross the board. Greece managed to place just half of a planned3 billion euro bond placement.

Shares in Portugal's Banco Espirito Santo plunged more than15 percent.

"It is not ideal timing given all the concerns the markethas on Portugal," said Michael Michaelides, a rates analyst atRBS (LSE: RBS.L - news) in London.

Oil prices were lower for a ninth session, withBrent nearing $108 a barrel in the commodity's longest losingstreak in four years and U.S. light crude off 0.18percent at $102.11. Prices were pressured by weak U.S. gasolinedemand and the prospect of rising supply from Libya. (Reporting by Michael Connor; Editing by Dan Grebler)

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