* Gold hits all-time high at $1,300 an ounce
* Bond prices up as U.S. stocks halt 4-week rally
* Dollar flat against euro after hitting 5-month high (Updates to early afternoon)
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 reassessed the strength of the equity markets' four-week rally. That rethinking of the rally occurred in the face of rising concerns over the fiscal condition of Portugal and Ireland.
European debt fears also weighed on the euro, although the dollar continued to weaken against other major currencies on expectations that the Fed will pour money into the U.S. economy to support its fledging recovery.
"The bias is still to sell dollars right now in the wake of the Fed's announcement last week that it is ready to inject more stimulus to the U.S. economy," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York.
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 expectations of healthy demand at this week's Treasury auctions.
The price of the benchmark 10-year U.S. Treasury note
At 1 p.m. (1800 GMT), the Treasury will sell $36 billion of two-year Treasury notes, followed by $35 billion in five-year notes on Tuesday and $29 billion in seven-year notes on Wednesday.
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 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 24.41 points, or 0.22 percent, to 10,835.85, while the Standard & Poor's 500 Index <.SPX> slipped 3.85 points, or 0.34 percent, to 1,144.82. The Nasdaq Composite Index <.IXIC> fell 8.72 points, or 0.37 percent, to 2,372.50.
Europe's FTSEurofirst 300 index <.FTEU3> of top shares closed down 0.43 percent, while the MSCI All-Country World equity index <.MIWD00000PUS> was up just 0.05 percent, or essentially flat.
EURO-ZONE WORRIES
The euro was practically stable against the dollar at $1.3484, after reaching a five-month high, 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