* Global stocks trade flat on weak U.S. retail sales
* Euro slides to session lows vs dollar, below $1.27
* Oil eases below $77 a barrel on U.S. inventory report
* Bonds gain as weak U.S. retail sales rekindle worries
(Updates with U.S. market open; changes byline, dateline,
previous LONDON)
By Herbert Lash
NEW YORK, July 14 (Reuters) - The euro extended losses to a
session low and global stocks pared gains on Wednesday despite
Intel's blow-out results the day before as unexpectedly weak
U.S. retail sales data revived fears of a stalling recovery.
Talk of a possible debt downgrade for Spain, heightened by
a surge in borrowing by Spanish banks from the European Central
Bank in June to a new record high, helped erode risk appetite
and drive up the price of safe-haven assets like debt. For
details see: [] []
Sales at U.S. retailers fell for a second straight month in
June as weak receipts at automotive dealers and gasoline
stations provided further evidence the U.S. economic recovery
has slowed the past few months from its already-modest pace.
[]
The euro slipped to $1.2683 <EUR=>, down 0.2 percent on the
day, after hitting a two-month high around $1.2740 on Tuesday._
[]
On Tuesday, Moody's cut Portugal's debt rating by two
notches, adding to unease about debt levels in several euro
zone countries.
"Risk is being taken off the table right now," said Brian
Dolan, chief strategist at Forex.com in Bedminster, New Jersey.
"Talk of a possible Spanish downgrade has hurt the euro, but we
also saw it drift lower after retail sales disappointed and
stock futures started to fall."
Wall Street was slightly lower, except for tech shares that
were bolstered by stalwart Intel's strong results posted after
the bell on Tuesday, while shares in Europe were down further.
Global shares measured by MSCI's all-country world index
<.MIWD00000PUS> traded flat, steadied by earlier strong gains
in Asia from chip and PC makers after Intel's results pointed
to potential upside in coming months in those sectors.
But a 0.5 percent decline in U.S. June retail sales after a
1.1 percent drop in May was greater than a 0.2 percent dip
forecast by analysts, and this weighed on investors.
A STALLING RECOVERY
The data "confirms a very reluctant American consumer,
which is going to put a stall on any recovery in the United
States," said Joseph Trevisani, chief market analyst at FX
Solutions in Saddle River, New Jersey.
In early trade, the Dow Jones industrial average <> was
up 9.50 points, or 0.08 percent, at 10,370. The Standard &
Poor's 500 Index <.SPX> was down 0.70 points, or 0.07 percent,
at 1,093.64. The Nasdaq Composite Index <> was up 7.11
points, or 0.31 percent, at 2,249.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.13 percent at 83.534.
Against the yen, the dollar <JPY=> was down 0.28 percent at
88.42.
Bund futures and U.S. Treasuries rose. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
12/32 in price to yield 3.08 percent. September Bund futures
<FGBLU0> rose to a session high of 129.09 before paring gains.
Investors looked ahead to a Federal Reserve statement later
on Wednesday about the U.S. economy, and minutes from its most
recent monetary policy meeting.
Some expect Fed officials to cut their outlook for economic
growth, tracking recent moves by Wall Street economists.
"If the Fed declares that growth will be marked down and we
won't be roaring into recovery in the second half of the year,
that's going to dampen enthusiasm," said Edward Riley, chief
executive of Riley Asset Management in Boston.
Reuters polls of more than 600 economists showed on
Wednesday that the world economy will cool a bit in the next
few months as powerhouses China and the United States gear down
and governments attempt to dam rivers of red ink.
[]
Oil eased to below $77 a barrel, falling from a two-week
high, after a weekly industry report showed a surprise increase
in U.S. crude inventories and European equities turned lower.
[]
U.S. crude stockpiles rose by 1.7 million barrels, the
American Petroleum Institute reported on Tuesday. European
stocks fell after gaining in the previous six sessions.
U.S. crude <CLc1> fell 46 cents to $76.69. Brent crude
<LCOc1> was down 22 cents to $76.43.
Spot gold prices <XAU=> fell 85 cents to $1,209.80 an
ounce.
Earlier in Asia, stocks rose to a three-week high. Japan's
Nikkei average <> surged 2.7 percent to its highest close
in three weeks, while the MSCI ex-Japan share index
<.MIAPJ0000PUS> was up 1.4 percent.
(Editing by Philip Barbara)
