GLOBAL MARKETS-Equities, euro slide on Greece, Portugal ratings

* S&P downgrades Portugal to A-minus with outlook negative

* S&P cuts Greece to "junk"

* Euro deepens losses against dollar

* U.S. Treasuries rally (Recasts with Greece, Portugal downgrades; new throughout)

By Jennifer Ablan

NEW YORK, April 27 (Reuters) - Global stocks slid and the euro deepened losses against the dollar on Tuesday after Standard & Poor's cut its credit rating on Greece into "junk" territory and slashed its ratings on Portugal.

German Bund futures hit a session high after S&P cut its ratings on Portugal by two notches. The move by S&P drove up investors' bid for safety, and U.S. Treasury debt prices rose.

European equities suffered steep losses, with Portugal's benchmark index plunging 5 percent and the pan-European FTSEurofirst 300 index <.FTEU3> provisionally closing down 2.6 percent. The Greek bank index <.FTATBNK> plunged 9.23 percent, and European bank stocks skidded.

On Wall Street, the news from Portugal overshadowed strong earnings, dragging down all three major indexes. The market suffered a knife blow following the news on Greece's ratings, with indexes off about 1 percent.

Standard & Poor's downgraded Greece into junk territory on concerns about its ability to implement the reforms needed to address its high debt burden, cutting its rating a full three notches to BB-plus, the first level of speculative, or junk, status.

The outlook is negative, meaning the agency could downgrade the rating again.

In its downgrade of Portugal, Standard & Poor's cited concerns about its ability to deal with high debt levels given the country's weak economic outlook. It cut the rating by two notches to A-minus, or four notches above speculative, or "junk" status.

Investors had already bracing for the next weak link in the euro zone, targeting Portugal, Ireland and Spain, as Germany continued to hold out for strict conditions on the aid package offered to Greece by the European Union and the International Monetary Fund.

"If (Germany) were moving faster, it's arguable the risk of contagion would be less. However, at this point in time, the markets smell blood," said Charles Diebel, head of European interest rates strategy at Nomura.

German Chancellor Angela Merkel has said that Greece must commit to further painful austerity measures and show that it can return to a sustainable economic path before Germany can approve aid. [ID:nBEB004453]

"The market is wondering whether political ramifications could delay the money or raise a question mark over whether Greece will be able to finance itself before the deadline," said Daragh Maher, senior currency strategist at Credit Agricole.

The euro extended losses versus the dollar after S&P cut Greece's rating. For details see [ID:nWNA9638] and [ID:nWNA9645]. The euro fell to a new session low of $1.3254 from about $1.3315 before the news, according to Reuters data. It was last down 1 percent at $1.3264.

Five-year credit default swaps on Greek government debt rose to a record high of 798 basis points from 710.3 basis points at New York close on Monday. The cost of insuring Portuguese debt for five years rose to 344 basis points from 311.2 basis points. Earlier, Portuguese CDS hit a record 349 basis points.

Greece is hoping that the 45 billion euro ($59.97 billion) aid package from the EU and the IMF [ID:nLDE63P0LU] will arrive in time to finance a debt roll-over on May 19, but Merkel's comments have created market jitters as the timing for approving the package now looks tight.

Fears of a Greek default and contagion within the euro zone prompted a sell-off in Greek and Portuguese bonds. The Greek/German 10-year bond yield spread widened to 691 basis points -- the largest gap since at least early 1998 according to Bank of Greece data -- as investors demanded higher premiums to hold Greek debt.

Banks took a pounding despite forecast-beating quarterly earnings from Deutsche Bank , which tumbled 2.67 percent over fears it would not be able to repeat the strong results in coming quarters.

EURO HAMMERED, AGAIN

In stocks, benchmark indexes were down. The Dow Jones industrial average <.DJI> was down 144.72 points, or 1.29 percent, at 11,060.31. The Standard & Poor's 500 Index <.SPX> was down 19.62 points, or 1.62 percent, at 1,192.43. The Nasdaq Composite Index <.IXIC> was down 35.38 points, or 1.40 percent, at 2,487.57.

U.S. Treasury debt prices were higher.

The benchmark 10-year U.S. Treasury note was up 32/32, with the yield at 3.6838 percent. The 2-year U.S. Treasury note was up 7/32, with the yield at 0.9424 percent. The 30-year U.S. Treasury bond was up 59/32, with the yield at 4.5524 percent.

In currencies, the dollar was up against a basket of major trading-partner currencies, with the U.S. Dollar Index <.DXY> up 0.48 percent at 81.874 from a previous session close of 81.481.

In energy and commodities prices, U.S. light sweet crude oil fell $1.46, or 1.73 percent, to $82.74 per barrel,, and spot gold prices rose $2.87, or 0.25 percent, to $1157.20. The Reuters/Jefferies CRB Index <.CRB> was down 3.19 points, or 1.15 percent, at 275.19. (Editing by Leslie Adler)