US STOCKS-Wall St slips late on Portugal fears

                                

                                
 * S&P review for Portugal debt hits stocks late
                                
 * Consumer confidence, Midwest manufacturing lend support
                                
 * Volatility index surges on short-term uncertainty
                                
 * Dow down 0.4 pct, S&P off 0.6 pct, Nasdaq off 1.1 pct
 * For up-to-the-minute market news see [STXNEWS/US]
 (Recasts with S&P's Portugal review, adds analyst's quote and
Lowe's)
                                
 By Edward Krudy
                                
 NEW YORK, Nov 30 (Reuters) - U.S. stocks fell in a choppy session
on Tuesday as news late in the session that Portugal's debt could be
downgraded reignited selling in a high-volume flurry that may bode
ill when markets reopen.
                                
 Earlier, the S&P 500 had erased much of a 1 percent loss after
improved consumer confidence and manufacturing data were the latest
signs the U.S. economy was on the mend.
                                
 Adding to investors' near-constant torment from Europe, Standard
& Poor's put Portugal's credit rating on review for a possible
downgrade just minutes before U.S. markets closed, saying the country
may have to turn to the EU and IMF for funding.
                                
 If European markets take that news badly when they open on
Wednesday, selling may spill over into U.S. trading.
                                
 "If you start to see them sell off substantially, it usually
tends to have a rollover effect," said Doug Roberts, chief investment
strategist at Channel Capital Research.com in Shrewsbury, New
Jersey.
                                
 Financial and technology stocks ranked among the biggest drags.
Bank of America <BAC.N> fell 3.2 percent to $10.95, while Micron Tech
<MU.O> lost 4 percent to $7.27.
                                
 With Europe engaged in ad hoc crisis management for much of the
year, investors are torn between fears the region's troubles will
spiral out of control and signs of U.S. economic strength and equity
valuations that are below long-term averages.
                                
 "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.
                                
 Consumer discretionary stocks were among the better performers
after the Conference Board reported U.S. consumer confidence rose to
its highest level in five months. Retailer Gap Inc <GPS.N> rose 3.1
percent to $21.36, while Tiffany & Co <TIF.N> added 2.4 percent to
$62.10.
                                
 Improved consumer sentiment as well as stronger U.S. Midwest
business activity are the latest in a series of reports that have
made investors more optimistic before Friday's November unemployment
report and as the holiday spending season gets under way.
[ID:nN30263756]
                                
 "If we get that (nonfarm payrolls) print up toward 200,000 like
we expect ... maybe that's enough to break the spell of being
transfixed by the European problems," said Bill Stone, chief
investment strategist at PNC Wealth Management in Philadelphia.
                                
  The Dow Jones industrial average <.DJI> dropped 46.47 points, or
0.42 percent, to 11,006.02. The Standard & Poor's 500 Index <.SPX>
fell 7.21 points, or 0.61 percent, to 1,180.55. The Nasdaq Composite
Index <.IXIC> lost 26.99 points, or 1.07 percent, to 2,498.23.
                                
 Global investors increased their exposure to equities in November
despite weaknesses on many bourses, while U.S. and British fund
managers stepped away from crisis-hit euro-zone bonds, a Reuters
asset allocation poll found.
                                
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 For details on Reuters' latest asset allocation poll, see
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 VIX JUMPS, GOOGLE FALLS
                                
 Reflecting investors' fear over short-term uncertainty, the CBOE
Volatility Index, or VIX <.VIX>, shot up 9.3 percent to 23.54.
                                
 Amid the economic reports, the S&P/Case-Shiller home prices data
was a fly in the ointment. Monthly prices fell more than expected in
September and prices from a year earlier rose more slowly than
forecast. [ID:nNLLTME6O7]
                                
 But in a sign that investors may have grown too bearish on the
sector, the Dow Jones U.S. home construction index <.DJUSHB> edged up
0.9 percent after closing Monday at its lowest since July 2009. The
index is down 13.2 percent this year.
                                
 U.S. home improvement chain Lowe's Cos <LOW.N> reaffirmed its
sales and profit outlook for its current fiscal 2010, sending its
shares up 1.5 percent to close at $22.70. In mid-November, Lowe's CEO
said he believes most of the decline in home prices is over.
                                
 Google Inc <GOOG.O> weighed on the Nasdaq index following media
reports that it is close to a deal to buy local advertising website
Groupon Inc in what could be the Internet company's biggest
acquisition to date. Google shares fell 4.5 percent to $555.71.
 [ID:nN30246836]
                                
 Declining stocks beat advancers by a ratio of almost 2 to 1 on
the New York Stock Exchange, and by just over 2 to 1 on the Nasdaq.
                                
 About 9.08 billion shares traded on the New York Stock Exchange,
the American Stock Exchange and Nasdaq, above the year-to-date
average of about 8.48 billion.
 (Reporting by Edward Krudy; Editing by Jan Paschal)