(Repeats to fix typo in headline)
* Euro zone debt fears hit euro for 3rd day
* Stocks slip, while US bond prices rise
* Oil hit by demand concerns (Updates prices, adds byline)
By Caroline Valetkevitch
NEW YORK, July 12 (Reuters) - Investors dumped the euro for a third day on Tuesday as moves by officials to stem the European debt crisis failed to allay concerns that the risk was spreading to Italy and Spain.
Prices of U.S. government bonds rose and gold hit a record high as investors spooked by fears of contagion sought safety. Investors are worried the potential effect on the global economy, especially as the U.S. recovery has struggled to pick up speed.
In a bid to keep Italy and Spain from the same fate as Greece, Portugal and Ireland, euro zone finance ministers promised Monday cheaper loans, longer maturities and a more flexible rescue fund. For details, see [ID:nL6E7IB1PQ]
But they set no deadline, and the Dutch finance minister, Jan Kees de Jager, said a selective default for Greece was no longer being excluded. [ID:nB5E7I401K]
"The situation in Europe continues to deteriorate and uncertainties within the sovereign credit space remain high," said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut.
Fears over Italy have accelerated concerns over the impact of the debt crisis because the country is the euro zone's third-largest economy.
In equities markets, European stocks fell after shares tumbled overnight in Asia on fears over the European debt crisis. But on Wall Street, stocks largely managed to edge higher a day after posting their worst day in a month.
Helping support markets, traders cited rumors that the European Central Bank was buying peripheral bonds for the first time in three months, with Portugal the suspected target.
The pan-European FTSEurofirst 300 <.FTEU3> provisionally closed down 0.5 percent at 1,092.31 pionts, off its session lows.
In Asian markets, Japan's Nikkei stock index closed off 1.4 percent, in the biggest fall in a month and Hong Kong shares posted their biggest daily fall in 14 months.
The Dow Jones industrial average <.DJI> was up 8.86 points, or 0.07 percent, at 12,514.62. The Standard & Poor's 500 Index <.SPX> was up 0.87 points, or 0.07 percent, at 1,320.36. The Nasdaq Composite Index <.IXIC> was down 5.75 points, or 0.21 percent, at 2,796.87.
In the foreign exchange market, the euro
The euro zone concerns helped lift bond prices, as
investors sought safer assets. The benchmark 10-year U.S.
Treasury note
"The market has woke up to the fact that there's a much larger problem (than Greece). That's what precipitated the large fall," Adam Myers, senior FX strategist at Credit Agricole CIB, said of the fall in the euro. "I very much doubt the European Central Bank, let alone the IMF, can bail out a country the size of Italy."
There was some respite for Italian assets after speculation swirled that the European central bank was buying Italian and Spanish paper, even though traders who usually see those transactions said they had seen no evidence of such trades.
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Eurozone pledges new steps to help Greece: [ID:nL6E7IB1PQ]
Italy dragged into eurozone crisis: [ID:nLDE76A0EA]
Graphic on sovereign credit ratings:
http://r.reuters.com/vyc22s
BOJ holds fire, more optimistic on economy:[ID:nL3E7IC00Q]
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The costs of insuring against a default by the euro zone's peripheral issuers hit record highs, and Italian and Spanish bond yields spiked higher. [GVD/EUR]
Brent crude oil futures fell 57 cents to $116.67 on fears
about slowing energy demand.
Euro-priced gold rose to a second consecutive record on Tuesday, driven by investors who found little comfort in the pledges from European Union officials to contain the spread of the debt crisis across the single currency bloc.
Spot gold
COMEX August gold futures