* European debt concerns weigh on euro
* 2-yr Treasuries yields hit record low on QE speculation
* Tighter Swiss bank capital rules pressure stocks
(Updates with U.S. markets' close)
By Walter Brandimarte
NEW YORK, Oct 4 (Reuters) - The U.S. dollar gained broadly
on Monday on lingering concerns about euro-zone debt, while
speculation of further monetary easing by the U.S. Federal
Reserve boosted Treasuries prices.
U.S. and European stocks fell as tighter banking capital
rules imposed by Swiss policymakers reminded investors of
potential troubles in the European banking system.
Japan was also headed to a negative start, as Nikkei
futures traded in Chicago <NKZ0> fell 120 points to 9,350.00.
Worries about euro zone economies were again in the
spotlight, adding pressure to the euro, after the Irish central
bank said Ireland's economy will crawl to a virtual halt this
year. Investors were also cautious about the implementation of
more austerity measures in Portugal.
"The euro has come a very long way in a very short period
of time, and certainly Ireland and the peripheral euro zone
country issues have not gone away," said Omer Esiner, chief
market analyst at Commonwealth Foreign Exchange Inc in
Washington. When those issues "come back in the spotlight, they
are used to take some profits on the euro."
Analysts added, however, that the trend of a weakening
dollar remains intact.
The European single currency <EUR=> weakened 0.80 percent
against the dollar to $1.3678.
Euro zone concerns also bolstered the dollar against other
major currencies. The U.S. Dollar index <.DXY> rose 0.50
percent despite expectations of additional monetary easing by
the Fed, which tends to be negative for the greenback.
Against the Japanese yen, the dollar <JPY=> was up 0.25
percent at 83.40.
Gold prices retreated slightly as the dollar rose. Spot
prices for the metal <XAU=> fell 0.24 percent to $1,314.00 an
ounce, close to Friday's all-time high of $1,320.80.
Gold prices have been soaring recently as investors see it
as a safe-haven alternative to a weakening dollar.
"Gold is holding up comparatively well considering the
rebound in the U.S. dollar," said David Thutell, an analyst at
Citigroup. "I suspect that for many months there will be enough
market participants who don't buy the recovery story and will
keep buying gold."
Speculation that the Fed will eventually resume
quantitative easing to support the economy, probably by
purchasing more government bonds, sent yields on two-year
Treasury notes <US2YT=RR> to a record low of 0.4 percent in
overnight trading.
The 10-year Treasury notes <US10YT=RR> traded 8/32 higher
in price to yield 2.48 percent, down from 2.52 percent late on
Friday.
TIGHTER BANK RULES
Key stock indexes slid in the United States and Europe as
the dollar weakened, weighing on prices of raw materials and
commodity-related stocks in general.
A decision by Swiss regulators to require UBS AG
<UBS.N><UBSN.VX> and Credit Suisse <CS.N><CSGN.VX> to hold far
more capital than their international rivals also weighed on
bank stocks.
The rules, aimed at preventing a banking crisis in
Switzerland, could crimp competitiveness in investment banking.
For details, see [].
"These austerity measures are necessary but don't have a
stimulating effect on the market," said Malcolm Polley,
president and chief investment officer of Stewart Capital
Advisors in Indiana, Pennsylvania.
The MSCI All-Country World stock index <.MIWD00000PUS> fell
0.58 percent, while Europe's FTSEurofirst 300 index <>
fell 0.63 percent in its sixth straight session of losses.
The Dow Jones industrial average <> ended down 78.41
points, or 0.72 percent, at 10,751.27, while the Standard &
Poor's 500 Index <.SPX> fell 9.21 points, or 0.80 percent, to
1,137.03. The Nasdaq Composite Index <> lost 26.23 points,
or 1.11 percent, to 2,344.52.
Microsoft Corp <MSFT.O> dropped 1.9 percent to $23.91 after
Goldman Sachs downgraded the software maker. [].
Key emerging market stock indexes remained in positive
territory, however, as investors continued to favor
fast-growing developing economies. The MSCI index for emerging
market shares <.MSCIEF> gained 0.43 percent.
Oil prices were little changed after a rally of more than 6
percent last week. U.S. crude prices <CLc1> settled down 11
cents, 0.13 percent, at $81.47 a barrel.
After Latin American markets closed, Brazil announced it
was doubling to 4 percent a tax on foreign investment into
domestic fixed-income assets, as part of a bid to curb the
appreciation of the real.
The measure should reduce currency gains in the short term,
while making Brazilian government bonds less attractive to
foreign investors, analysts said. Part of the inflows could be
diverted to other Latin American countries such as Mexico or
Colombia, forcing them into similar measures.
(Additional reporting by Chuck Mikolajczak, Chris Reese and
Nick Olivari in New York, Jan Harvey in London; Editing by
Kenneth Barry)
