GLOBAL MARKETS-Euro hit again by debt jitters; stocks seesaw

                                
 * Spain's takeover of a savings bank adds to debt jitters
                                
 * Euro falls sharply; U.S. data adds to dollar strength
                                
 * Dow drops 0.4 pct, European shares snap losing streak
  (Updates with U.S. markets open)
                                
 By Walter Brandimarte
                                
 NEW YORK, May 24 (Reuters) - The euro dropped 1.5 percent
on Monday after Spain's weekend bailout of a small savings bank
drove new fears about weaknesses in the European financial
system, reviving safe-haven demand for gold and U.S.
Treasuries.
                                
 Stocks were volatile session, with the Dow and the S&P 500
hovering around the unchanged mark as bank shares fell but gain
sin technology stocks drove up the Nasdaq. In Europe, stocks
snapped a three-day losing streak as mining shares rose on a
bright outlook for metals, offsetting declines in bank shares.
                                
 But news that Spain's central bank on Saturday had taken
over savings bank CajaSur after a failed merger weighed heavily
on sentiment across financial markets. [ID:nLDE64L007]
                                
 CajaSur will now have access to Spain's bank bailout fund.
Analysts worry other banks could require public funds at a time
when much of Europe is struggling with massive deficits.
                                
 "The Spanish news is not really a big story, but it does
highlight that there are a lot of cracks in the financial
system," said Steven Butler, director of foreign exchange
trading at Scotia Capital in Toronto. "The concern is that if
these cracks get bigger, the question is who would be able to
contain it. This is obviously a warning and we'll see if it
becomes more significant."
                                
 Wall Street opened lower on the euro-zone fears, with the
Dow losing 1 percent at one point, but trimmed losses later.
                                
 The Dow Jones industrial average <.DJI> was down 38.40
points, or 0.38 percent, at 10,154.99 around 1640 GMT. The
Standard & Poor's 500 Index <.SPX> dipped 1.37 points, or 0.13
percent, to 1,086.32, but the Nasdaq Composite Index <.IXIC>
rose 11.78 points, or 0.53 percent, to 2,240.82.
                                
 Bank shares were mostly lower following, with the Standard
& Poor's financial index <.GSPF> down 0.8 percent. Shares of
Citigroup <C.N>, gained 3.7 percent after Goldman upgraded the
bank to "buy" from "neutral."
                                
 European trading was thin due to a religious holiday, but
most markets were open. The FTSEurofirst 300 <.FTEU3> finished
0.33 percent higher, after sliding as much as 0.7 percent
earlier.
                                
 Shares of miners supported European markets higher on a
strong demand outlook for metals following comments by an
official that China should be particularly cautious in
introducing new monetary tightening measures. Gains were
limited by worries that the euro zone's debt crisis could
hamper growth.
                                
 Plans outlined by British finance minister George Osborne
and Treasury minister David Laws on Monday to cut 6.25 billion
pounds ($9 billion) of government spending generally hurt
sentiment, traders said.
                                
 Global stocks as measured by MSCI <.MIWD00000PUS> were
practically flat, after last week's 4.8 percent loss.
                                
 But emerging markets stocks <.MSCIEF> rose 0.8 percent, as
rising prices of oil and other raw materials supported the
outlook for commodity-exporting countries.
                                
 U.S. crude oil futures edged up in choppy trading as some
analysts said the market was oversold, but concerns about
Europe curbed a sharp recovery in prices. The oil contract for
July <CLN0> was up 0.36 percent, at $70.29 per barrel.
                                
 EURO PLUNGES AGAIN
                                
 The euro fell broadly on Monday, as persistent concerns
about the euro-zone debt situation threatened the future of the
single currency.
                                
 The news wiped out last week's short-covering rally in the
euro, which had been spurred by talk European monetary
officials might intervene to prop up the beleaguered single
currency.
                                
 The euro <EUR=> was down 1.54 percent at $1.2376. Last
week, it reached a four-year low of $1.2143.
                                
 Data showing U.S. existing home sales rose more than
expected in April briefly pushed the euro to session lows
against the dollar at $1.2345, according to EBS data.
[ID:nN24249105]
                                
 "People are piling money into dollars and Treasuries,
hoping they can ride out the storm," said John Canally,
economist and investment strategist at LPL Financial in
Boston.
                                
 Benchmark 10-year U.S. Treasury notes <US10YT=RR> rose 8/32
in price, with the yield at 3.2069 percent.
                                
 As aversion to risk rose, spot gold prices <XAU=> climbed
1.06 percent to $1,187.60.
 (Editing by Leslie Adler)