GLOBAL MARKETS-Stocks shaken, dollar gains on euro

*World stocks stumble on US earnings, economic reports

*Dollar benefits from euro zone fiscal worries

*Stocks weaken after Fed chief Bernanke confirmed (Updates with U.S. markets close)

By Al Yoon

NEW YORK, Jan 28 (Reuters) - Most global shares slumped on Thursday after reports cast doubts on the U.S. economic recovery and the health of the UK banking system, while fiscal worries elsewhere in Europe dented the euro versus the dollar.

Earnings and outlooks from big technology companies such as Qualcomm and Motorola fell short of expectations and also pushed U.S. stocks lower.

Shares in the United States and Europe fell as weekly figures on initial claims for unemployment benefits suggested a sluggish jobs recovery. Another report showing a disappointing rise in big-ticket durable goods orders also dimmed the recovery outlook.

"We used to think we would start creating jobs in the first half of the year, but data points like this suggest that's less likely," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. "The longer it takes to create jobs, the more uncertain the recovery becomes."

Stocks added to losses at the close of trading in New York after Federal Reserve Chairman Ben Bernanke was confirmed by the U.S. Senate, causing the benchmark Standard & Poor's 500 Index to close below the key 1,085 level. [ID:nLDE60R11G]

The Dow Jones industrial average <.DJI> fell 115.70 points, or 1.13 percent, to end at 10,120.46. The Standard & Poor's 500 Index <.SPX> lost 12.97 points, or 1.18 percent, to 1,084.53. The Nasdaq Composite Index <.IXIC> declined 42.41 points, or 1.91 percent, to close at 2,179.00.

World stocks as measured by MSCI fell nearly 1 percent. The index is at its lowest since Nov. 6 and down more than 7 percent from highs set earlier this month.

European stocks also struggled, and the euro fell, as concerns about banks and the fiscal health of Greece, Portugal and other euro zone countries weighed on investor confidence. European shares dropped 1.2 percent.

German unemployment beat forecasts, while European Central Bank Executive Board member Gertrude Tumpel-Gugerell said it was time fiscal and monetary policy returned to normal.

In currencies, the dollar rose to its highest level in more than six months against the euro as Germany and France denied a newspaper article suggesting an EU bailout for Greece was being planned, while Athens said it has struck no deal for China to buy its bonds and will search mainly in Europe for funds.

The premium investors demand to hold Greek government bonds rather than benchmark German Bunds set a new euro lifetime high on Thursday. In U.S. debt, benchmark 10-year U.S. note yields were little changed at 3.64 percent.

Meantime, budget proposals from the Portuguese government on Wednesday failed to reassure ratings firms. The premium to hold Portuguese debt compared with German bonds also rose.

"Clearly that concern is not going away and if anything, it's becoming a greater concern for the market," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto. "It seems that the market is willing to push euro/dollar even lower."

The euro dropped 0.31 percent to $1.3973, the lowest level since mid-July. The dollar rose against a basket of major trading-partner currencies <.DXY>, up 0.31 percent at 78.921, but fell 0.11 percent against the Japanese yen to 89.90 yen .

Losses sustained in Europe and the United States followed an upbeat day in Asia where Japan's Nikkei average rose 1.6 percent, snapping a four-day losing streak following positive reports from Honda Motor and Sony Corp.

In energy and commodities prices, U.S. light sweet crude oil rose 27 cents, or 0.37 percent, to $73.94 per barrel, and spot gold prices rose 90 cents, or 0.08 percent, to $1086.80. (Additional reporting by Tamawa Desai, Harpreet Bhal, Naomi Tajitsu, Elaine Lies, Ryan Vlastelica, Chuck Mikolajczak and Wanfeng Zhou; Editing by Kenneth Barry)