By Herbert Lash
NEW YORK (Reuters) - Global equity markets and the dollar slipped on Wednesday as skittish investors sought the safety of less risky assets as the possibility of a Greek debt default loomed a little bit larger.
The dollar slid after hitting its highest in more than a week on Tuesday, while yields on U.S. 10-year Treasuries dipped as investors weighed the prospect of higher U.S. interest rates.
But the outlook for the dollar remained upbeat despite its decline on Wednesday after another round of generally positive economic data this week. The data supported the view that U.S. rates were likely to rise sooner than later, mostly likely in September.
The Commerce Department said gross domestic product fell at a 0.2 percent annual clip in the first quarter, instead of the 0.7 percent pace of contraction it reported last month.
U.S. Treasuries prices earlier rebounded from a two-day sell-off after late-stage debt negotiations between Greece and its international creditors hit a roadblock, crimping optimism for a deal and driving demand for safe-haven bonds.
International creditors demanded politically sensitive changes to Greek Prime Minister Alexis Tsipras' tax and reform proposals, adding fresh uncertainty to talks aimed at unlocking aid to avert a debt default next week.
"We are getting to the point where it's do or die, take it or leave it, and I think what you're seeing today is that there's growing fear that this thing is not going to come together," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago.
The price of benchmark 10-year Treasury notes rose 3/32 to yield 2.3943 percent. Lingering optimism for a Greek debt deal limited the price gains and prevented yields from falling below recent ranges.
The dollar fell against the euro, with the single currency up 0.2 percent at $1.1191. The dollar index was down 0.07 percent at 95.369. Against the yen, the dollar gained 0.03 percent to 123.98 yen.
MSCI's all-country index, a gauge of stock performance in 46 countries, fell 0.31 percent, while the pan-European FTSEurofirst 300 index closed down 0.39 percent to 1,577.18.
The Dow Jones industrial average fell 112.31 points, or 0.62 percent, to 18,031.76. The S&P 500 slid 8.88 points, or 0.42 percent, to 2,115.32 and the Nasdaq Composite lost 20.53 points, or 0.4 percent, to 5,139.56.
Crude futures fell about 2 percent after a government report showing an eighth straight weekly drop in U.S. crude stockpiles was offset by a large build in oil products, which have dominated market action lately.
The U.S. Energy Information Administration (EIA) said gasoline stockpiles rose by 680,000 barrels last week, versus a drop of 304,000 barrels forecast by analysts in a Reuters poll.
Brent crude fell $1.05 to $63.40 a barrel, while U.S. crude dropped 88 cents to $60.13 a barrel.
(Reporting by Herbert Lash; Editing by Nick Zieminski and Meredith Mazzilli)
