* US jobless claims at lowest in over 2 years, spending up
* Risk appetite drives US stocks up 1 pct, Treasuries down
* Portugal, Spain spreads widen as Irish tension spreads (Updates with US markets open; changes dateline, previous LONDON)
By Walter Brandimarte
NEW YORK, Nov 24 (Reuters) - Stocks and the euro rebounded on Wednesday after stronger-than-expected U.S. jobs and consumer sentiment data eclipsed lingering concerns about the European debt crisis.
Prices of U.S. Treasuries and gold dropped as investors felt more comfortable taking on risk one day after rising tensions in the Korea peninsula jolted global markets.
The relief came after data showed claims for U.S. unemployment benefits last week dropped to their lowest level in more than two years. Consumer sentiment also rose to its highest since June. For details, see [ID:nN24211131].
"Now you are getting good economic data, and you have a tug of war going on here between an improving economy and geopolitical events," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"The market is trying to determine how much weight to put on each one of these events."
Fears that the Irish debt crisis could spread into weaker members of the euro zone also inspired caution, with yield spreads of Portuguese and Spanish debt widening to fresh records even as Ireland unveiled a much-awaited austerity plan.
The 15 billion euro ($20 billion) plan for the next four years includes deep spending cuts and tax increases while retaining economic assumptions that many analysts deem unrealistic. [ID:nLDE6AM25A]
"There are still a lot of questions surrounding the bailout of Ireland and the budget; the government is in a limbo and we do not know if it will go through," said Franz Wenzel, strategist with AXA Investment Managers in Paris.
Major U.S. stock indexes gained more than 1 percent as investors put Europe's worries on the back burner.
The Dow Jones industrial average <.DJI> rose 135.89 points, or 1.23 percent, to 11,172.26, while the Standard & Poor's 500 Index <.SPX> gained 15.36 points, or 1.30 percent, to 1,196.09. The Nasdaq Composite Index <.IXIC> was up 46.64 points, or 1.87 percent, at 2,541.59.
MSCI's All-Country World Index <.MIWD00000PUS> climbed 0.77 percent, while Europe's FTSEurofirst 300 <.FTEU3> index of top shares rose 1.12 percent.
DOLLAR WEAKENS
The U.S. dollar weakened along with other safe-haven assets. The U.S. Dollar Index <.DXY>, which measures the performance of the greenback against a basket of major currencies, was down 0.19 percent.
Still, the euro
Trading was also thin on the eve of the U.S. Thanksgiving holiday when U.S. financial markets will be closed.
U.S. Treasury prices fell as stocks took the appeal off the
government debt market. Prices of benchmark 10-year notes
Gold prices