GLOBAL MARKETS-Stocks, euro slide on Greek scare, Hoenig speech

                                

                                
 * Global equities slide on Greek jitters, Hoenig comments
                                
 * Euro eases to more than one-week low as GDP also weighs
                                
 * Oil slips from 18-month high as dollar strengthens
                                
 * Bonds rise on Greece debt woes, robust 10-year sale
 (Updates with close of U.S.)
                                
 By Herbert Lash
                                
 NEW YORK, April 7 (Reuters) - U.S. stocks slid and the euro
eased on Wednesday as Greece's fiscal woes resurfaced and
investors took flight after a top Federal Reserve official
warned of the perils of keeping interest rates too low for too
long.
                                
 Copper prices tumbled and U.S. oil futures ended lower,
snapping six straight days of gains, on government data that
showed crude stocks rose last week for the 10th week in a row
to their highest level since last June. For details see:
[nN07165677]
                                
 Much of the day's sentiment was driven by nagging worries
over Greece's ability to resolve its fiscal problems, which
helped fuel a safety bid for less risky U.S. government debt.
Treasury prices also rose on record-setting demand at a $21
billion auction of 10-year notes. [ID:nN07125978]
                                
 Greece's borrowing costs surged to a new high after the
government said Greek banks had asked for billions of euros in
support and euro zone states haggled over the conditions of
potential bailout loans. [ID:nLDE636138]
                                
 The spread between Greek government bond yields versus
German Bunds blew out to record levels as skepticism grew over
Greece's ability to fund its debt at current levels.
[ID:nLDE6361IL]
                                
 "We thought progress was being made and the steps were
being taken to get this resolved. Now that might be off track,"
said Alan Lancz, president of Alan B. Lancz & Associates Inc,
in Toledo, Ohio.
                                
 The strength of the Treasury auction had offset worries
about Greece on Wall Street for most of the day, keeping the
three major indexes little changed. But a speech by the
president of the Kansas City Federal Reserve Bank, Thomas
Hoenig, drove a late-day sell-off after he said a long period
of low interest rates would encourage risky financial behavior.
[ID:nN07126274]
                                
 The comments by Hoenig -- the lone dissenter of a recent
Fed decision to keep rates on hold -- gave investors a reason
to sell stocks after the recent rally in equities.
                                
 "It's a short-term extended market that's vulnerable to
short-term pullbacks and this is what it's using as the
excuse," said Scott Marcouiller, senior equity market
strategist at Wells Fargo Advisors in St. Louis.
                                
 Earlier in the day Fed Chairman Ben Bernanke said the U.S.
economy still faces significant headwinds, suggesting he was in
no rush to raise rates. [ID:nWEQ003857]
                                
 The Dow Jones industrial average <.DJI>  closed down 72.47
points, or 0.66 percent, to 10,897.52. The Standard & Poor's
500 Index <.SPX> shed 6.99 points, or 0.59 percent, to
1,182.45. The Nasdaq Composite Index <.IXIC> lost 5.65 points,
or 0.23 percent, to 2,431.16.
                                
 Energy shares fell with the drop in crude oil prices.
                                
 MSCI's all-country world index of global equities
<.MIWD00000PUS> was off 0.1 percent, a decline offset somewhat
by rising emerging market shares <.MSCIEF>.
                                
 A downward revision to euro zone economic growth to zero
from a previous reading of growth of 0.1 percent highlighted
the fragility of the recovery in Europe.
                                
 The euro dropped against the dollar to its lowest level in
more than a week, down 0.4 percent at $1.3353. Against the yen,
the dollar fell 0.5 percent at 93.29 yen <JPY=>.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
24/32 in price to yield 3.86 percent.
                                
 U.S. light crude futures for May <CLc1> fell 96 cents, or
1.1 percent, to settle at $85.88 a barrel. An intraday low of
$85.52 was hit in post-settlement trading as the U.S. stock
market dropped to a late session low.
                                
 London ICE Brent <LCOc1> fell 56 cents, or 0.65 percent, to
settle at $85.59 a barrel.
                                
 Gold rose to its highest level in nearly three months,
defying the stronger dollar, as a combination of fund buying,
physical demand and technical support lifted the metal above
$1,150 an ounce. [ID:nLDE6360PC]
                                
 The June gold contract <GCM0> settled up $17 at $1,153 an
ounce.
 (Reporting by Leah Schnurr, Wanfeng Zhou, Ellen Freilich and
Gene Ramos in New York; Brian Gorman, Rebekah Curtis and
William James in London; Writing by Herbert Lash; Editing by
Leslie Adler)