* Euro dips below $1.30 to hit 10-week low vs dollar
* S&P signals possible Portuguese credit rating downgrade
* U.S. stocks dip on European debt concerns
(Updates throughout, adds Nikkei futures, U.S. market close)
By Manuela Badawy and Alina Selyukh
NEW YORK, Nov 30 (Reuters) - Growing fears about Portugal's
debt drove the euro to a 10-week low against the dollar on
Tuesday, while U.S. stocks fell for a third straight day even
as the U.S. economy showed some encouraging signs.
The euro fell below the technically critical $1.30 level
after Standard and Poor's put Portugal's A-minus credit ratings
on review for a possible downgrade, citing uncertainties
related to a possible financial rescue by the European Union
and the International Monetary Fund.
Investors fled to to safe-haven assets on the worries about
euro zone sovereign debt, driving U.S. government bond prices
higher and sending gold prices to a 2-1/2 week peak.
The strengthening dollar helped drive down the price of oil
by almost 2 percent, adding to ongoing concerns about China's
economic growth.
The pressure is building around debt-soaked Portugal and
Spain as investors worry about a repeat of this year's Irish
and Greek bailouts.
Although Lisbon, much like Ireland earlier, denies Portugal
needs aid, markets are already discounting an eventual
Portuguese emergency financial rescue.
While rescuing Portugal would be manageable, assistance for
Spain would sorely test the European Union's resources, raising
deeper questions about the integrity of its 12-year-old
currency and possible contagion beyond Europe.
S&P late on Tuesday said it was placing its A-minus
long-term and A-2 short-term ratings on Portugal on creditwatch
with negative implications, meaning a possibility of a
downgrade.
"The market has taken what to happened to Ireland as a road
stop, not the final destination," said Vincent Boberski, senior
vice president at Vining Sparks in Memphis, Tennessee.
The spreads on bonds of peripheral European countries rose
to new highs on Tuesday amid concern weak member states may
ultimately be forced to default.
EUROPEAN JITTERS
On Wall Street, stocks finished lower, but showed some
resilience as the Conference Board, an industry group, reported
that U.S. consumer confidence rose to its highest level in five
months in November.
In another positive sign, the Institute for Supply
Management-Chicago reported that U.S. Midwest business activity
grew faster than expected in November.
The Dow Jones industrial average <> closed down 46.47
points, or 0.42 percent, at 11,006.02. The Standard & Poor's
500 Index <.SPX> dipped 7.21 points, or 0.61 percent, at
1,180.55. The Nasdaq Composite Index <> shed 26.99
points, or 1.07 percent, at 2,498.23.
Google Inc <GOOG.O> shed 4.5 percent to $555.71 following
media reports that the company was close to a deal to buy local
advertising website Groupon Inc in what could be the Web search
leader's biggest acquisition to date. []
"You do have a bit of a tug of war between those investors
who see the environment as positive for equities over the
intermediate to long-term (and) traders who are more concerned
about the short-term impact of European debt concerns," said
Tim Ghriskey, chief investment officer of Solaris Asset
Management in Bedford Hills, New York.
In Europe, the FTSEurofirst 300 <> index of top
European companies closed 0.2 percent lower at 1,067.22 points,
posting a 1.8 percent loss for November, its heaviest monthly
slump since May.
In Europe, The December futures contract for the Nikkei 225
stock index <0#NK:> trading in Chicago fell 155 points to
9,940.
MSCI's all country world index <.MIWD00000PUS> was down
0.62 percent.
The euro posted its worst month since May on Tuesday, with
more losses likely next month.
"The European credit market is in panic mode because of
fears of insolvency, and the euro is trading off those credit
yields," said Boris Schlossberg, director of FX research at GFT
in New York.
"For the euro to stabilize, credit yields need to stabilize
and for that to happen, we need action from the European
Central Bank. The Irish bailout was not enough and so the
pressure is building."
The euro <EUR=> fell to $1.2980, its lowest level since
mid-September, amid fear of regional contagion and uncertainty
over the currency's future.
With the spotlight on the euro, the dollar continued to
gain, hitting a more than two-month high against a currency
basket <.DXY> at 81.310.
U.S. Treasuries prices rose on the anxiety over the fiscal
and debt problems in Europe, but the bond market was still
poised for its worst month since December 2009.
[]
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
5/32, with the yield at 2.8077 percent. The two-year U.S.
Treasury note <US2YT=RR> rose 3/32, with the yield at 0.4607
percent. The 30-year U.S. Treasury bond <US30YT=RR> gained to
12/32, with the yield at 4.1203 percent.
U.S. crude oil <CLc1> settled down 1.89 percent to $84.10
per barrel, and spot gold prices <XAU=> rose $17.16, or 1.26
percent, to $1383.60 an ounce, a 2-1/2 week-high as investors
bought the metal as a safe store of value.
(Additional reporting by Richard Leong, Rodrigo Campos, Edward
Krudy and Gertrude Chavez-Dreyfuss in New York, Elizabeth
Fullerton and Tamawa Desai in London, Blaise Robinson in Paris;
Editing by Leslie Adler)
