* Dollar gains vs euro on euro zone debt fears
* U.S. stocks held down by disappointing retail sales
* Energy, commodities fall on dollar's strength
(Updates with U.S. closing prices, Nikkei futures)
By Manuela Badawy
NEW YORK, Jan 6 (Reuters) - The euro fell to a five-week
low against the dollar on Thursday on revived worries about the
euro zone's sovereign debt crisis, while stocks eased on softer
retail sales data before a U.S. employment report expected to
give direction to markets.
Commodity prices' decline, including oil, helped the
inflation-wary U.S. government bond market.
U.S. stock indices fell as major U.S. retailers missed Wall
Street estimates for December sales after a post-Christmas
blizzard slowed a two-month shopping spree, driving down
consumer shares.
Expectations that Friday's U.S. non-farm payrolls will show
a 175,000 gain in December magnified the dollar's strength
against the euro but left equity investors edgy.
The Dow Jones industrial average <> was down 25.58
points, or 0.22 percent, at 11,697.31. The Standard & Poor's
500 Index <.SPX> was down 2.71 points, or 0.21 percent, at
1,273.85. The Nasdaq Composite Index <> was up 7.69
points, or 0.28 percent, at 2,709.89.
"The market has just been on a tear ... and a lot of
investors are probably sitting on their hands waiting for the
(jobs) report tomorrow," said Don Wordell, portfolio manager of
RidgeWorth MidCap Value Fund in Orlando, Florida.
"After the report on Wednesday, I would say the market
probably needs to see a private employment number close to
200,000 and the overall number better be up that high too. If
it's materially below that, I think that would be a reason for
the market to sell off."
The ADP Employer Services survey, which showed private
employers added 297,000 jobs last month, raised expectations
about Friday's broader employment report from the government.
Some analysts are expecting employment gains of as much as
500,000.
The front month futures contract for the Nikkei 225 stock
index <0#NK:> trading in Chicago fell 20 points to 10,520.
World stocks as measured by MSCI <.MIWD00000PUS> dipped 0.2
percent. Emerging markets stocks <.MSCIEF> were down 0.5
percent on fears that record high food prices could stoke
inflation, protectionism and unrest in key emerging economies.
The FTSEurofirst 300 <> index of top European shares
finished up 0.4 percent at 1,147.23 points after touching
1,154.10, the highest since mid-September 2008.
Spreads between peripheral euro zone government bond yields
and benchmark German debt widened as investors worried about
fresh supply next week from the region's higher-yielding
issuers.
Wider spreads were driven by a rise in Portuguese debt
yields. [] Debt auctions in Spain and Italy are
also scheduled for next week.
"It's a continuing concern about the refinancing risk for
euro zone countries in the next few weeks," said Samarjit
Shankar, managing director of global foreign exchange strategy
at BNY Mellon in Boston.
"In general, the euro is suffering from some fundamental
concerns about the sustainability of the currency itself in
terms of the sovereign debt crisis."
The euro fell to $1.2997 on trading platform EBS, its
weakest level in five weeks. It last traded down 0.99 percent
at $1.3008 <EUR=EBS>.
The dollar index <.DXY> was up 0.71 percent at 80.826.
The dollar's rise reverberated throughout the commodities
market. U.S. light sweet crude oil futures <CLc1> settled down
2.13 percent at $88.38 per barrel, and spot gold prices <XAU=>
fell 0.4 percent to $1371.70.
U.S. Treasury prices gained. The benchmark 10-year U.S.
Treasury note <US10YT=RR> was up 16/32, with the yield at 3.401
percent. The 2-year U.S. Treasury note <US2YT=RR> was up 2/32,
with the yield at 0.6767 percent. The 30-year U.S. Treasury
bond <US30YT=RR> was up 13/32, with the yield at 4.5141
percent.
(Additional reporting by Caroline Valetkevitch and Gertrude
Chavez-Dreyfuss; Editing by Kenneth Barry)
