* Stock markets mixed on EU debt summit, U.S. data
* EU zone peripheral bonds dip, U.S. Treasuries level off
* Dollar pares losses against euro, yen
(Rewrites first paragraph, updates with opening of U.S.
markets, changes byline, dateline, previous LONDON)
By Alina Selyukh
NEW YORK, Dec 16 (Reuters) - Yields on debt of smaller euro
zone countries jumped and global stock markets fell on Thursday
after Spain paid high premiums in its bond auction and European
leaders signaled markets may not have seen the last of the euro
zone debt woes.
The U.S. dollar was little changed against the euro, but
was supported by data including a fall in weekly claims for
jobless aid and a rise factory activity in the country's
Mid-Altantic region which pointed to an economic recovery that
is gaining traction.
Yields on U.S. Treasuries steadied after a three-day spike
but held near seven-month highs on lingering expectations of
inflation, higher growth and a wider fiscal deficit. The
benchmark 10-year U.S. Treasury <US10YT=RR> traded down 4/32,
yielding 3.5517 percent.
The volatility in debt markets spilled over to global
equity markets. The MSCI's all-country world stock index
<.MIWD00000PUS> dropped 0.46 percent while the FTSEurofirst 300
<> index of leading European shares eeked out marginal
gains of 0.04 percent.
European Union leaders met on Thursday for a two-day summit
in Brussels to address credit risks of the region and sign off
on a permanent fund to stabilize struggling countries.
Spain was forced to pay a hefty premium at its final bond
auction of the year on Thursday, in a key test of investor
appetite for euro zone peripheral debt a day after Moody's said
it may cut the country's rating.
The Spanish Treasury raised 2.4 billion euros ($3.20
billion), within the targeted range of 2-3 billion euros but
disappointing some analyst who expected more debt to be sold.
"The big picture isn't that bad for stocks, but the problem
is fears over euro zone debt issues are like a sword of
Damocles," said Christian Jimenez, fund manager and president
of Diamant Bleu Gestion, in Paris.
"Valuation ratios are attractive, yet we haven't seen
inflows in equities. Big institutional investors are still on
the sidelines, for regulation reasons but also because they are
wary of potential new spikes in the debt crisis."
Despite optimistic indicators from the U.S. economic data,
including a slight uptick in November housing starts and weekly
jobless claims in line with expectations, U.S. benchmark
indexes were mixed.
The Dow Jones industrial average <> tumbled 19.98
points, or 0.17 percent, to 11,437.49. The Standard & Poor's
500 Index <.SPX> fell 0.08 points, or 0.01 percent, to
1,235.15, while the Nasdaq Composite Index <> gained 4.52
points, or 0.17 percent, to 2,621.74.
Euro <EUR=> fell to session lows versus dollar, trading at
$1.3192, down 0.14 percent. the dollar <.DXY> rose against a
basket of major trading-partner currencies, up 0.08 percent to
80.322. Against the Japanese yen <JPY=>, the dollar gained 0.14
percent to 84.37 yen.
Oil and gold slipped as the dollar strengthened, with U.S.
crude oil <CLc1> down 0.73 percent to $87.97 per barrel and
spot gold prices <XAU=> shedding 1.11 percent to $1364.00.
(Additional reporting by Neal Armstrong and Emily Flitter in
London and Blaise Robinson in Paris)
