GLOBAL MARKETS-U.S. data hits stocks, euro gains on debt sales

                                

                                
 * Wall Street down after weak U.S. economic data
                                
 * Euro gains vs dollar after Spain's debt sales
                                
 * Spot gold rises, crude oil slips
                                
 By Daniel Bases
                                
 NEW YORK, June 17 (Reuters) - U.S. stocks fell on Thursday
after weak economic data added to worries about a fragile
recovery, while European shares and the euro rose after
reassuring demand for Spanish government bonds.
                                
 Prices for gold rose on a combination of safe-haven demand
and a weaker U.S. dollar. Crude oil prices slipped.
                                
 An index of factory activity in the U.S. mid-Atlantic
region in June plunged to its lowest level since August 2009,
adding to worries that a tepid U.S. economic recovery is
fizzling. [ID:nN17165505]
                                
 Higher-than-expected weekly claims for U.S. jobless
benefits and the largest drop in U.S. consumer prices in nearly
1-1/2 years also weighed on U.S. shares and caused European
shares to pare early gains. [ID:nN17254724]
                                
 "A few months back, the economy seemed to be on better
footing, and now data is casting some doubt about the economic
recovery. People are trying to evaluate that in front of the
earnings season," said Giri Cherukuri, head trader at Oakbrook
Investments LLC in Lisle, Illinois.
                                
 In midday New York trade the Dow Jones industrial average
<.DJI> fell 41.50 points, or 0.40 percent, to 10,367.96. The
Standard & Poor's 500 Index <.SPX> lost 3.84 points, or 0.34
percent, to 1,110.71. The Nasdaq Composite Index <.IXIC>
dropped 5.32 points, or 0.23 percent, to 2,300.61.
                                
 U.S. consumer discretionary shares were among the biggest
drags, with home goods retailer Bed, Bath & Beyond Inc <BBBY.O>
down 6.65 percent to $42.12 and the S&P retail index <.RLX> off
1.62 percent.
                                
 Consumer spending typically accounts for about two-thirds
of U.S. economic activity, making the weak labor market a
source of ongoing concern.
                                
 European shares closed higher for a seventh straight
session on Thursday, even as the U.S. data diminished risk
appetite.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed up 0.25 percent at 1,041.84 points as solid demand for
Spain's auction of government bonds boosted investor confidence
in the euro zone's economic outlook.
                                
 Oil major BP Plc <BP.L> surged 6.7 percent a day after it
said it will set up a $20 billion fund for damage claims from
its huge Gulf of Mexico oil spill, sell assets and suspend
dividend payments. the actions removed uncertainty over the
dividend and the size of the funds to cover claims.
[ID:nN16172720]
                                
 EUROPEAN DEBT SALES
                                
 The euro rose against the dollar after Spain's ability to
sell bonds soothed worries about the country's public finances
and squeezed short positions by investors who had been betting
against the single currency.
                                
 The euro rose 0.41 percent against the dollar to $1.2357
<EUR=>.
                                
 Against the yen, the euro dropped 0.20 percent to 112.29
yen <EURJPY=>. The greenback also fell against the yen, down
0.60 percent to 90.87 yen <JPY=> as the weak U.S. data
increased risk aversion.
                                
 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 spread snapped back after the auction and was last at
214 basis points.
                                
 "The strong demand for Spanish bonds should help restore
confidence, said Ciaran O'Hagan, strategist at Societe
Generale.
                                
 The two-year Schatz yield <DE2YT=TWEB> was up 2.6 basis
points at 0.528 percent, while the 10-year Bund yield
<DE10YT=TWEB> was down 1.4 bps at 2.664 percent.
                                
 Benchmark 10-year U.S. Treasuries rose 19/32 of a point in
price, pushing the yield down to 3.19 percent <US10YT=RR>.
                                
 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.
 (Additional reporting by George Matlock, Kirsten Donovan and
Natsuko Waki in London; Editing by Leslie Adler)