* Wall Street lower on weak Cisco results, outlook
* U.S. weekly jobless claims drop to 2-1/2 year low
* U.S. dollar rallies on jobless claims report
* Portugal debt concerns weigh on euro
By Daniel Bases
NEW YORK, Feb 10 (Reuters) - Weak corporate results
jeopardized an eight-day rally in the Dow industrials and
weighed on European stocks on Thursday, overshadowing upbeat
weekly U.S. jobless claims data that boosted the U.S. dollar.
A stronger greenback has put some selling pressure on
commodity prices. The dollar gained after the U.S. Labor
Department reported an unexpected drop in initial claims for
unemployment benefits to their lowest level in 2-1/2 years.
"(Claims) looked good and the market had a muted but
positive reaction to them," said Tim Ghriskey, chief investment
officer at Solaris Asset Management in Bedford Hills, New
York.
"It comes at a time of year where earnings are being
reported and it looks like, at least this morning, we are going
to see a bit of profit taking in the market," he said.
After weeks of generally positive news on the corporate
front that has lifted benchmark indexes to 2-1/2 year highs,
investors have suddenly been presented with a barrage of less
than robust reports.
The latest reading of U.S. earnings, for instance, showed
that of the companies listed on the Standard & Poor's 500
index, 72 percent of those reporting have beaten analysts' mean
quarterly estimates, according to Thomson Reuters data.
However, companies such as computer networking equipment
maker Cisco Systems Inc <CSCO.O> fell 11.75 percent to $19.45 a
day after warning about dwindling public spending and weaker
margins.
In Europe, major bank Credit Suisse <CSGN.VX> missed profit
expectations because of debt charges, and Diageo <DGE.L>, the
world's biggest spirits group, missed expectations with just a
9 percent rise in half-year earnings.
The Dow Jones industrial average <> fell 64.64 points,
or 0.53 percent, to 12,175.25. The Standard & Poor's 500 Index
<.SPX> lost 7.06 points, or 0.53 percent, to 1,313.82. The
Nasdaq Composite Index <> was down 9.88 points, or 0.35
percent, at 2,779.19.
MSCI's all-country world index <.MIWD00000PUS> fell 1.09
percent, pressured in particular by emerging markets. The EM
sub-index lost 1.89 percent.
Europe's FTSEurofirst 300 <> was off 0.6 percent,
even with a gain of 2.59 percent for Deutsche Boerse
<DB1Gn.DE>, which looks set to buy peer NYSE Euronext <NYX.N>.
NYSE'S stock fell 2.36 percent in early New York trading.
Japan's Nikkei closed down 0.1 percent.
Most developed markets remain in the black for the year
however, with U.S. indexes leading the way, reflecting a shift
this year from emerging markets to developed ones.
DOLLAR SURGE
The U.S. dollar's rise accelerated after the weekly jobless
claims report showed a drop to a seasonally adjusted 383,000,
the lowest since July 2008.
While the U.S. data underpinned the greenback's gains,
investors remain worried about Europe's lack of progress in
tackling a sovereign debt crisis which undermined the euro.
"I think this can continue as the run-up in yields is
dollar-supportive and now we're encountering a renewed sense of
fear about euro zone debt issues," said Brian Dolan, chief
strategist at Forex.com in Bedminster, New Jersey.
The euro, which hit a 12-week high above $1.38 earlier this
month, struggled as investors drove Portuguese bond yields to
their highest level since the currency was introduced in 1999.
Portugal is considered at risk of becoming the next euro
zone country to need a bailout. The European Central Bank
stepped in to buy Portuguese bonds to help stabilize the
fragile market.
The euro fell 1.05 percent to $1.3586 <EUR=> while sterling
dropped 0.45 percent to $1.6031 percent <GPB=>.
Sterling fell after the Bank of England left interest rates
at a record low. Traders said a recent spike in U.S. yields set
the dollar up for further near-term gains.
The dollar made 1 percent gains against the Swiss franc,
rising to 0.9670 francs <CHF=> and rose 0.96 percent against
the yen to 83.15 <JPY=>.
U.S. Treasury debt prices fell, renewing their recent
selloff, as traders sold older issues to make room for $16
billion in 30-year bonds in this week's quarterly refunding.
U.S. light sweet crude oil <CLc1> rose 87 cents, or 1
percent, to $87.58 per barrel. Spot gold prices <XAU=> fell
$7.54, or 0.55 percent, to $1354.80.
(Additional reporting by Jeremy Gaunt, William James, Richard
Leong, Rodrigo Campos, Steven C. Johnson, Neal Armstrong and
Brian Gorman; Editing by Kenneth Barry)
