GLOBAL MARKETS-U.S. stocks, dollar slip as euro debt woes linger

                                
 * Banks lead financials lower on euro zone exposure fears
                                
 * U.S. dollar slips as risk appetite improves; euro higher
                                
 * Oil gains on a weak dollar, Iran geopolitics and cold
                                
 * U.S. bonds edge down ahead of Tuesday's auction
 (Updates with close of U.S. markets)
                                
 By Herbert Lash
                                
 NEW YORK, Feb 8 (Reuters) - U.S. stocks and the dollar fell
on Monday in a see-saw session that saw asset prices rise and
fall as investors adjusted their views on the seriousness of
the euro zone's sovereign debt troubles.
                                
 After a modest midday rebound on Wall Street that helped
push the euro to a session high above $1.37, U.S. equity
markets fell on concerns that certain highly indebted countries
in the euro zone may force banks to raise capital.
                                
 The Dow industrials closed below 10,000 for the first time
since November.
                                
 The U.S. dollar drifted lower after European stocks posted
a modest recovery and commodities rose on enhanced risk
appetite, leading investors to venture into other
higher-yielding currencies. For details see: [ID:nN08520438]
                                
 But the euro traded near 8-1/2-month lows versus the
dollar, which later pared some losses, as investors worried
about the fiscal health of such euro zone countries as Greece,
Portugal and Spain.
                                
 "The market is still being pressured by concerns about
Europe, and banks are being pressured more so because of their
possible exposure to the sovereign debt issues, specifically
that of Greece," said Frank Pavilonis, senior market strategist
at Lind-Waldock in Chicago.
                                
 Bank stocks fell broadly, also hurt by lingering
uncertainty about the regulatory environment in the wake of
U.S. President Barack Obama's planned reform of banking.
                                
 Bank of America <BAC.N> shares dropped 3.55 percent to
$14.48, JPMorgan <JPM.N> slipped 1.6 percent to $37.70, and
Citigroup <C.N> shed 2.2 percent to $3.15.
                                
 The S&P financial index <.GSPF> dropped 2.2 percent as the
KBW bank index <.BKX> slipped 1.5 percent.
                                
 "There are now some concerns not only about some of the
regulatory issues that the banks might be under, but also about
the increased possibility of capital raises from some of the
banks," said David Lutz, managing director of trading at Stifel
Nicolaus Capital Markets in Baltimore. "I think most of it is
probably the sovereign issue."
                                
 The Dow Jones industrial average <.DJI> closed down 103.84
points, or 1.04 percent, at 9,908.39. The Standard & Poor's 500
Index <.SPX> fell 9.45 points, or 0.89 percent, at 1,056.74.
The Nasdaq Composite Index <.IXIC> was down 15.07 points, or
0.70 percent, at 2,126.05.
                                
 Banks in Europe rebounded from earlier falls, but Greek
banks National Bank of Greece SA <NBGr.AT>, Alpha Bank
<ACBr.AT> and Bank of Piraeus <BOPr.AT> lost 5.4 percent to 8.5
percent.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed up 0.7 percent at 979.33 points.
                                
 U.S. Treasury debt prices edged lower ahead of the Treasury
Department's $40 billion auction of three-year notes, but
nagging worries about the European debt woes limited losses.
[ID:nN08205900]
                                
 Shorter-maturing U.S. government debt garnered most of the
day's light trading volume, pushing yields higher as investors
made room for the new supply set for Tuesday.
                                
 The three-year Treasury bond <US3YT=RR> fell 2/16 to yield
1.29 percent, while the benchmark 10-year Treasury note
<US10YT=RR> was down 1/32 to yield 3.57 percent.
                                
 Oil rose nearly 1 percent, snapping a three-day losing
streak, as a weaker U.S. dollar, cold weather and geopolitical
disputes provided support. [ID:nSGE61708E]
                                
 U.S. crude for March delivery <CLc1> rose 70 cents to
$71.89 per barrel. The contract on Friday had fallen as low as
$69.50, the lowest since Dec. 15. In London, Brent crude
<LCOc1> rose 52 cents to settle at $70.11.
                                
 Unusually cold weather is forecast to settle across key
heating fuel consuming regions in the United States this week,
in the wake of heavy snow over the weekend. [ID:nN04177188]
                                
 U.S. gold futures ended higher, boosted by the dollar's
drop and short-covering after the metal fell to a three-month
low in the previous session. [ID:nN08208397]
                                
 U.S. April gold futures <GCJ0> settled up $13.40 at
$1,066.20 in New York.
                                
 Copper rose, bouncing off 3-1/2-month lows on bargain
hunting and a weaker dollar, but the metal remained vulnerable
to worries about the fiscal health in the euro zone.
[ID:nLDE61711D]
                                
 Earlier in Asia, Japan's Nikkei average <.N225> fell 1.1
percent to a two-month closing low as exporters like Sony Corp
<6758.T><SNE.N> were clobbered by a strong yen. Asia Pacific
shares outside Japan as measured by MSCI <.MIAPJ0000PUS> fell
0.1 percent after earlier falling to its lowest levels since
early September.
 (Reporting by Ryan Vlastelica, Wanfeng Zhou, Edward McAllister
and Emily Flitter in New York; Joanne Frearson, Harpreet Bhal,
Jessica Mortimer, William James and Jan Harvey in London;
writing by Herbert Lash; Editing by Leslie Adler)