GLOBAL MARKETS-US data hits stocks, euro gains on debt sales

                                

                                
 * Wall Street down after weak U.S. economic data
                                
 * Euro gains on greenback after European debt sales
                                
 * Spot gold rises, crude oil slips under $77 per barrel
                                
 By Daniel Bases
                                
 NEW YORK, June 17 (Reuters) - The euro rose against the
U.S. dollar on Thursday as strong European government bond
sales eased public finance concerns, but weak U.S. economic
data led U.S. stocks to falter and cut European share gains.
                                
 Spain and France sold a combined 13 billion euros worth
debt, to solid demand.
                                
 Most of the attention, however, was on Spain's ability to
sell bonds given its heavy debt burden and investor nervousness
that some of the region's banks may be facing a liquidity
freeze.
                                
 Prices for gold rose on a combination of safe-haven demand
and a weaker U.S. dollar. Crude oil prices dipped from their
May 10 highs to below $77 a barrel.
                                
 An index of factory activity in the U.S. mid-Atlantic
region in June plunged, adding to worries that a tepid U.S.
economic recovery is now fizzling. [ID:nN17165505]
                                
 That report on top of higher-than-expected weekly U.S.
jobless claims and the largest drop in U.S. consumer prices in
nearly 1-1/2 years left U.S. shares lower and led to European
share prices giving up their early gains. [ID:nN17254724]
                                
 "The market was testing new highs and this will put a major
headwind into progress. We needed a positive catalyst to keep
people buying, and obviously this isn't it. This will be a
critical component to the rest of the day's trading," said
Alan Lancz, president of Alan B. Lancz & Associates Inc in
Toledo, Ohio.
                                
 The euro rose 0.68 percent against the U.S. dollar to
$1.2390 <EUR=> but dropped 0.34 percent against the yen to
112.14 <EURJPY=>. The greenback fell 1 percent to 90.51 yen
<JPY=> as the weak data increased risk aversion.
                                
 In early New York Trade the Dow Jones industrial average
<.DJI> fell 68.32 points, or 0.66 percent, to 10,341.14. The
Standard & Poor's 500 Index <.SPX> dropped 6.58 points, or 0.59
percent, to 1,108.03. The Nasdaq Composite Index <.IXIC> lost
13.30 points, or 0.58 percent, to 2,292.63.
                                
 European shares gave up early gains. The FTSEurofirst 300
index <.FTEU3> traded down 0.04 percent.
                                
 Oil major BP Plc <BP.L> surged roughly 7 percent after
saying it will set up a $20 billion fund for damages claims
from its huge Gulf of Mexico oil spill, sell assets and suspend
dividend payments to shareholders. [ID:nN16172720]
                                
 UK finance minister George Osborne announced the biggest
shake-up of the regulatory landscape in 13 years on Wednesday,
saying he was to give the Bank of England ultimate control over
financial supervision.
                                
 In commodities, spot gold prices <XAU=> rose $14.95, or
1.21 percent, to $1245.50. U.S. light sweet crude oil <CLc1>
fell 96 cents, or 1.24 percent, to $76.71 per barrel.
                                
 Benchmark 10-year U.S. Treasuries rose 18/32 of a point in
price, pushing the yield down to 3.20 percent.
                                
 The two-year Schatz yield <DE2YT=TWEB> was up 1.6 basis
points at 0.518 percent, while the 10-year Bund yield
<DE10YT=TWEB> fell 1.6 bps at 2.662 percent.
                                
 EUROPEAN DEBT SALES
                                
 Spain's auction of 3.5 billion euros ($4.3 billion) worth
of 10-year and 30-year government bonds drew strong demand,
although it paid a hefty premium compared with previous issues
of the same paper.
                                
 While the debt succeeded in finding buyers, analysts
remained cautious about Spain's funding prospects.
                                
 "Spain ... wanted to show it could issue paper without
problems. But they paid a lot to get the paper away," said Huw
Worthington, a bond strategist at Barclays Capital in London.
                                
 The well-covered auction helped narrow the spread of
Spanish yields over benchmark Bunds from an earlier euro
lifetime high of 237 basis points. <ES10YT=TWEB><DE10YT=TWEB> 
  "The strong demand for Spanish bonds should help restore
confidence, said Ciaran O'Hagan, strategist at Societe
Generale.
                                
 France sold just short of 9.8 billion euros of conventional
BTANs and index-linked OATs, including a new five-year BTAN
that dealers said was cheap on the curve and therefore
attractive. [ID:nLDE65G0SP]
                                
 The French/German 10-year bond yield spread tightened to 42
basis points from 45 basis points earlier, having tightened
from 60 basis points on June 8.
 (Additional reporting by George Matlock, Natsuko Waki in
London; Editing by Padraic Cassidy)