CORRECTED - GLOBAL MARKETS-Stocks fall on Microsoft; Treasuries slip

                                
 (Corrects first paragraph to show yen at 13-1/2-year high, not
low, against dollar)
                                
 * Weak Microsoft, Nokia results hit U.S., European stocks
                                
 * Yen holds near 13-year peak vs dollar; sterling weak
                                
 * Geithner nears confirmation as U.S. Treasury Secretary
                                
 * Treasuries weaken on debt issuance fears, China remarks
                                
 By Steven C. Johnson
                                
 NEW YORK, Jan 22 (Reuters) - Wall Street swooned on
Thursday after a surprisingly grim earnings report from
Microsoft, following European shares lower, while anxious
investors kept the yen near a 13-1/2-year peak against the U.S.
dollar.
                                
 U.S. President Barack Obama's nominee to head the Treasury
Department won approval from a Senate panel, clearing the way
for a full Senate confirmation vote, and lifted the greenback
when he said a strong dollar is in the U.S. national interest.
                                
 But U.S. government bond prices turned lower after Treasury
Secretary designate Timothy Geithner said Obama believes China
was manipulating its currency. China is the biggest holder of
U.S. Treasuries, with some $682 billion as of November.
                                
 U.S. stocks fell after Microsoft <MSFT.O> said it would cut
up to 5,000 jobs over 18 months and would not offer new profit
forecasts for the rest of the fiscal year.
                                
 For full story see [ID:nN22530524].
                                
 Microsoft, the world's top software maker company, blamed
its profit miss on weak personal computer sales, which undercut
sales of its Windows operating system. Its shares fell more
than 9 percent, bringing losses for the year to 40 percent.
                                
 "It is a negative surprise for the market, certainly from a
bellwether technology company," said Richard Sparks, senior
equities analyst at Schaeffer's Investment Research in
Cincinnati, Ohio. "For Microsoft to miss its guidance, it
brings home the pervasive fallout from the credit crisis."
                                
 The Dow Jones industrial average <.DJI> was down 219.43
points, or 2.67 percent, at 8,008.67. The Standard & Poor's 500
Index <.SPX> was down 22.08 points, or 2.63 percent, at 818.16.
The Nasdaq Composite Index <.IXIC> was down 52.18 points, or
3.46 percent, at 1,454.89.
                                
 Another batch of dismal U.S. economic data, this time on
housing and unemployment, also weighed on share prices.
[ID:nN22528164]
                                
 European shares also fell for a fourth straight day. The
FTSEurofirst 300 <.FTEU3> index of top European stocks fell 0.8
percent, led lower by a 9 percent slump in Nokia shares
<NOK1V.HE> after the company reported disappointing earnings.
                                
 U.S. crude oil <CLc1> prices fell $2.33, or 5.3 percent, to
$41.24 per barrel.
                                
 GOVERNMENT DEBT CONCERNS
                                
 The dollar lost 0.6 percent to 88.87 yen <JPY=> after
falling as low as 87.10 yen on Wednesday, the lowest since
1995.
                                
 The dollar rose against most other major currencies, with
the euro dipping 0.4 percent to $1.2990 <EUR=> after Geithner
reiterated support for a strong dollar. Sterling was down 0.7
percent at $1.3880 <GBP=> after fears about the UK banking
sector on Wednesday drove it to its lowest level since 1985.
The British currency has fallen around 6 percent this week.
                                
 Geithner's remarks on China, however, weighed on Treasury
debt prices, pushing the benchmark 10-year note <US10YT=RR>
down 20/32 in price, with the yield at 2.62 percent.
                                
 Expectations of a slew of U.S. debt issuance have been
weighing on Treasury prices, and some investors worried that a
the possibility of a tougher U.S. line on Chinese currency
policy under Obama could prompt Beijing to purchase less debt.
                                
 "The Geithner comments on China coupled with the massive
supply is weighing heavily on the long end of Treasuries," said
Andrew Brenner, analyst at MF Global Inc in New York.
                                
 Sovereign debt worldwide has been under some pressure on
concerns that governments will have to borrow huge amounts to
help fund their packages designed to support the economy.
                                
 Worries about fiscal balance have driven the cost of
insuring sovereign debt of many major economies to record highs
in recent sessions, according to credit default swaps data.
                                
 Investors are also demanding more compensation to hold less
liquid euro zone debt than benchmark German government bonds.
                                
 Spreads of French 10-year bonds over German Bunds are
around 60 basis points, the widest since the euro's inception.
                                
 The 10-year Portuguese/Bund spread hit a new wide of 153
basis points on Wednesday after Portugal became the third euro
zone economy this year to have its credit rating downgraded by
Standard & Poor's.
 (Reporting by Reuters bureaus worldwide; Editing by James
Dalgleish)