* Global stocks trade flat on weak U.S. retail sales
* Euro slides to session lows vs dollar, below $1.27
* Oil eases below $77 a barrel on U.S. inventory report
* Bonds gain as weak U.S. retail sales rekindle worries (Updates with U.S. market open; changes byline, dateline, previous LONDON)
By Herbert Lash
NEW YORK, July 14 (Reuters) - The euro extended losses to a session low and global stocks pared gains on Wednesday despite Intel's blow-out results the day before as unexpectedly weak U.S. retail sales data revived fears of a stalling recovery.
Talk of a possible debt downgrade for Spain, heightened by a surge in borrowing by Spanish banks from the European Central Bank in June to a new record high, helped erode risk appetite and drive up the price of safe-haven assets like debt. For details see: [ID:nN14124800] [ID:nLDE66C1RA]
Sales at U.S. retailers fell for a second straight month in June as weak receipts at automotive dealers and gasoline stations provided further evidence the U.S. economic recovery has slowed the past few months from its already-modest pace. [ID:nN14122226]
The euro slipped to $1.2683
On Tuesday, Moody's cut Portugal's debt rating by two notches, adding to unease about debt levels in several euro zone countries.
"Risk is being taken off the table right now," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. "Talk of a possible Spanish downgrade has hurt the euro, but we also saw it drift lower after retail sales disappointed and stock futures started to fall."
Wall Street was slightly lower, except for tech shares that were bolstered by stalwart Intel's strong results posted after the bell on Tuesday, while shares in Europe were down further.
Global shares measured by MSCI's all-country world index <.MIWD00000PUS> traded flat, steadied by earlier strong gains in Asia from chip and PC makers after Intel's results pointed to potential upside in coming months in those sectors.
But a 0.5 percent decline in U.S. June retail sales after a 1.1 percent drop in May was greater than a 0.2 percent dip forecast by analysts, and this weighed on investors.
A STALLING RECOVERY
The data "confirms a very reluctant American consumer, which is going to put a stall on any recovery in the United States," said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey.
In early trade, the Dow Jones industrial average <.DJI> was up 9.50 points, or 0.08 percent, at 10,370. The Standard & Poor's 500 Index <.SPX> was down 0.70 points, or 0.07 percent, at 1,093.64. The Nasdaq Composite Index <.IXIC> was up 7.11 points, or 0.31 percent, at 2,249.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.13 percent at 83.534.
Against the yen, the dollar
Bund futures and U.S. Treasuries rose. [ID:nN14124838]
The benchmark 10-year U.S. Treasury note
Investors looked ahead to a Federal Reserve statement later on Wednesday about the U.S. economy, and minutes from its most recent monetary policy meeting.
Some expect Fed officials to cut their outlook for economic growth, tracking recent moves by Wall Street economists.
"If the Fed declares that growth will be marked down and we won't be roaring into recovery in the second half of the year, that's going to dampen enthusiasm," said Edward Riley, chief executive of Riley Asset Management in Boston.
Reuters polls of more than 600 economists showed on Wednesday that the world economy will cool a bit in the next few months as powerhouses China and the United States gear down and governments attempt to dam rivers of red ink. [ID:nLDE66C0VS]
Oil eased to below $77 a barrel, falling from a two-week high, after a weekly industry report showed a surprise increase in U.S. crude inventories and European equities turned lower. [ID:nSGE66D07E]
U.S. crude stockpiles rose by 1.7 million barrels, the American Petroleum Institute reported on Tuesday. European stocks fell after gaining in the previous six sessions.
U.S. crude
Spot gold prices
Earlier in Asia, stocks rose to a three-week high. Japan's Nikkei average <.N225> surged 2.7 percent to its highest close in three weeks, while the MSCI ex-Japan share index <.MIAPJ0000PUS> was up 1.4 percent.
(Editing by Philip Barbara)