* Gold hits all-time high at $1,300 an ounce
* Bond prices up as U.S. stocks halt 4-week rally
* Euro weakens on debt concerns after hitting 5-month high (Updates with U.S. markets close)
By Walter Brandimarte
NEW YORK, Sept 27 (Reuters) - Gold hit a record high of $1,300 per ounce and U.S. Treasury prices surged on Monday on renewed worries about euro-zone debt and expectations the Federal Reserve will further ease monetary policy.
U.S. and European stocks slipped as investors, increasingly
concerned about the fiscal condition of Ireland and Portugal,
reassessed the strength of the equity markets' four-week rally.
Nikkei stock futures traded in Chicago
European debt fears also weighed on the euro, although the dollar posted only modest gains against other major currencies as expectations that the Fed will pour money into the U.S. economy sapped the greenback.
"The euro right now is being pulled in a tug of war between the sovereign debt crisis still existing in the euro zone versus the prospect of a very serious QE2 (another round of quantitative easing) out of the U.S.," said Boris Schlossberg, director of FX research at GFT in New York.
"We had a big run after the Fed statement last week. We're pretty much in seesaw action."
Gold benefited from the prospects of more monetary stimulus, which could prove inflationary down the road, as well as from some investors' flight-to-quality bid.
Spot gold
"Momentum is still very much in favor of gold," said Jesper Dannesboe, senior commodity strategist at Societe Generale. "I wouldn't dare go against it, and definitely wouldn't want to be short. There's good appetite to buy."
Investors snapped up U.S. Treasury debt, driven by their desire for safer investments and healthy demand at an auction of new two-year government debt in the afternoon.
The price of the benchmark 10-year U.S. Treasury note
On Wall Street, the major U.S. stock indexes declined in spite of a flurry of corporate mergers and acquisitions.
Worries about euro-zone debt resurfaced after credit agency Moody's slashed its rating on some lower-grade debt of Anglo Irish Bank. For details, see [ID:nLDE68Q15A].
The Moody's downgrade offset early optimism with the M&A activity, and forced investors to rethink the reasons that have bolstered U.S. stocks during the past four weeks.
"We are nearing the end of the quarter. We've had a very strong month," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. "We may be in for a bit of consolidation here."
The Dow Jones industrial average <.DJI> declined 48.22 points, or 0.44 percent, to end at 10,812.04, while the Standard & Poor's 500 Index <.SPX> lost 6.51 points, or 0.57 percent, to finish at 1,142.16. The Nasdaq Composite Index <.IXIC> fell 11.45 points, or 0.48 percent, to 2,369.77.
Europe's FTSEurofirst 300 index <.FTEU3> of top shares closed down 0.43 percent, while the MSCI All-Country World equity index <.MIWD00000PUS> dipped 0.07 percent.
ANXIETY IN THE EURO ZONE
The euro slid 0.27 percent against the U.S. dollar to $1.3451, after reaching a five-month high earlier in the session, following Moody's decision to cut Anglo Irish Bank's unguaranteed senior debt by three notches and its subordinated debt by six.
Investors have been nervous about possible restructuring of Anglo Irish Bank's subordinated debt as government guarantees for such instruments expire later this week.
The dollar fell to a session low of 84.11 yen
U.S. crude oil