GLOBAL MARKETS-Euro falls on Spain concerns, stocks falter

                                

                                
 * U.S. stocks slide on housing data, global stocks falter
                                
 * Euro retreats from 2-week high on Spain credit worries
                                
 * U.S. debt prices extend gains after poor housing data
                                
 * Oil prices fall toward $76 after U.S. inventory increase
 (Updates with opening of U.S. markets, adds byline, dateline previous LONDON)
                                
 By Herbert Lash
                                
 NEW YORK, June 16 (Reuters) - The euro fell against the U.S. dollar on
Wednesday on fresh concerns about Spain's debt, while global stocks faltered
after data showed U.S. housing starts fell more than expected in May to a
five-month low.
                                
 Demand for safe-haven assets like bonds and gold rose as U.S. homebuilding
suffered from the expiration of a popular homebuyer tax credit that had buoyed
construction over the past two months. For details see: [ID:nN1563166]
                                
 Bund futures hit a session high and U.S. Treasury debt prices added to
gains, with the 30-year bond rising a full point following the data, which
showed May housing starts fell 10 percent and starts in April were revised
lower.
                                
 September Bund futures <FGBLc1> rose as much as 40 ticks on the day to a
session high of 128.70. The Spanish/German 10-year government bond yield spread
widened to 222 basis points, a euro lifetime high, following the report.
[ID:nLDE65F1H1]
                                
 The 10-year Treasury note <US10YT=RR> was up 10/32 in price to yield 3.27
percent. [ID:nN16142157]
                                
 European shares extended losses on the housing data, but then turned
higher. Wall Street opened lower as a profit warning from Nokia Corp
<NOK1V.HE> <NOK.N> and cost constraints at FedEx Corp <FDX.N> put a damper on
sentiment. [ID:nLDE65F1F8]
                                
 "The housing start numbers weren't great, and you have the concerns about
Spain and other euro zone countries' debt situation," said Kurt Brunner,
portfolio manager at Swarthmore Group in Philadelphia.
                                
 He said the Nokia and FedEx results painted a picture of an economic
recovery that could be "slower and more difficult."
                                
 The MSCI world equity index <.MIWD00000PUS> hovered near break-even after
hitting its highest level since mid-May earlier in the session, and the MSCI
emerging markets index <.MSCIEF> rose 0.5 percent.
                                
 The FTSEurofirst 300 index <.FTEU3> also rose slightly, extending a rally
to six days.
                                
 At 10 a.m., the Dow Jones industrial average <.DJI> was down 35.37 points,
or 0.34 percent, at 10,369.40. The Standard & Poor's 500 Index <.SPX> was down
3.37 points, or 0.30 percent, at 1,111.86. The Nasdaq Composite Index <.IXIC>
was down 5.19 points, or 0.23 percent, at 2,300.69.
                                
 In early New York trading, the euro fell 0.3 <EUR=> percent to $1.2289,
after rising as high as $1.2354 on electronic trading platform EBS, the
strongest level in two weeks.
                                
 LIQUIDITY FREEZE
                                
 Spanish banks' reliance on European Central Bank funding increased to
record levels in May, according to RBS research.
                                
 "The banks in Spain are facing a liquidity freeze with other banks
reluctant to lend to Spanish banks," said Fergal Smith, managing market
strategist in Canada at Action Economics in Toronto.
                                
 "That's helped cap the recent rally in the euro and in riskier assets.
We've seen Treasuries rally today, (the) euro/dollar come off," he added.
                                
 Gold rose 75 cents to $1,234.20 an ounce, with demand for the metal as a
haven holding firm on widening spreads between Spanish and German government
bond yields. [ID:nLDE65F0SR]
                                
 Industrial metal prices also fell from two-week highs, as the weak U.S.
housing data stoked concerns about the demand outlook for copper.
[ID:nLDE65F0L4]
                                
 Oil prices initially fell toward $76 a barrel after a surprise hike in
crude inventories in the United States, and on news of the weaker U.S. housing
data. [ID:nSGE65F05Q] Prices later turned slightly positive.
                                
 U.S. light sweet crude oil <CLc1> rose 7 cents, or 0.09 percent, to  $77.01
a barrel.
                                
 U.S. crude inventories jumped 579,000 barrels in the week to June 11 and
oil product stocks rose across the board, weekly data from the American
Petroleum Institute (API) trade group said on Tuesday. [API/S]
                                
 "When you look at the last data on the API side, it showed an increase in
crude oil. We are also looking at a big jump in gasoline stocks, and that could
be pretty bearish for oil," said Christopher Barret, an oil analyst at Credit
Agricole.
 (Reporting by Rodrigo Campos, Wanfeng Zhou, Emily Flitter in New York; Joanne
Frearson, Emma Farge, Jan Harvey and Ian Chua in London; Writing by Herbert
Lash; Editing by Padraic Cassidy)