GLOBAL MARKETS-Stocks slip, euro buoyed by ECB tender results

* Global stocks slip

* Euro hits 5-month high vs dollar, buoyed by ECB tender

* Oil at 7-week high, gold sets new peak as dollar wilts

* Month-end, quarter-end buying fuels Treasury price gains (Adds U.S. markets, byline, dateline; previous LONDON)

By Herbert Lash

NEW YORK, Sept 30 (Reuters) - Global stocks slipped and the euro hit a fresh five-month high on Thursday as investors shrugged off upbeat U.S. data and focused on a European funding operation that suggests Europe is stronger than many suspect.

The euro was on pace for its best quarterly gain in eight years after data showed euro zone banks had relied far less on European Central Bank funds than analysts had expected. For details see: [ID:nN30337480]

The euro was last down 0.1 percent at $1.3604 after the earlier five-month high against the U.S. dollar.

Stocks initially rallied and the U.S. dollar trimmed losses on rising hopes for better economic activity ahead after three separate U.S. economic reports came in better than expected.

But the rally in U.S. and European equity markets was short lived as traders reported many investors sold shares to lock-in gains for reporting end of month and quarterly performance.

Gold eased but not before hitting yet another record high on investors seeking an alternative to a wilting dollar and future protection against potential inflation risks.

The round of surprisingly strong U.S. economic data failed to snuff widespread expectations that the Federal Reserve will move to increase money supply in a bid to keep the U.S. economy from falling back into recession.

New U.S. claims for jobless benefits fell last week, a sign of an improving labor market, while Midwest business activity grew more than expected in September. Also, U.S. second-quarter growth was revised a touch higher on firmer consumer spending.

"Despite the good numbers, the reports are not solid enough to prevent the Fed from adding more stimulus to the country," said Joe Manimbo, a currency trader at Travelex Global Business Payments in Washington.

Vassili Serebriakov, a currency strategist at Wells Fargo in New York, agreed: "I don't think it's going to change the market's mind on further Fed easing, but I think markets will be alert to further upside surprises to U.S. data in the coming weeks," he said.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares fell 0.2 percent to 1,063.11 points. The index posted a 7 percent quarterly gain, its highest in a year.

The Dow Jones industrial average <.DJI> was down 84.39 points, or 0.78 percent, at 10,750.89. The Standard & Poor's 500 Index <.SPX> was down 7.90 points, or 0.69 percent, at 1,136.83. The Nasdaq Composite Index <.IXIC> was down 20.81 points, or 0.88 percent, at 2,355.75.

Equity markets in Europe fell for a fourth straight day as investors digested Spain's credit downgrade and Ireland's massive bank bailout scheme even though the news was expected.

"Both headlines from Spain and Ireland have been more or less what the market has been expecting, so there were no negatives there," said Michael Leister, strategist at WestLB.

European banks took 29.4 billion euros in six-day ECB funds, almost half a Reuters poll forecast of around 50 billion euros.

The results of the ECB tender operation suggested regional banks need less central bank funding than expected, leading German government bond prices to fall sharply.

December Bund futures fell to a three-day low of 130.97, down as much as 84 ticks.

Oil reversed earlier losses to hit a seven-week high above $79 a barrel, supported by a weak dollar. [ID:nSGE68T04L]

U.S. Treasury debt prices were lower.

The benchmark 10-year U.S. Treasury note was down 6/32 in price to yield 2.52 percent.

The dollar index fell to an eight-month low, under pressure from investors shunning the U.S. currency, but later gained strength.

The dollar was higher against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.32 percent at 78.939.

Against the Japanese yen, the dollar was down 0.17 percent at 83.54.

The Australian dollar climbed to a two-year high against the U.S. dollar as investors bet that the Reserve Bank of Australia will raise the benchmark interest rate next week. [ID:nN30285299]

U.S. light sweet crude oil rose 1.7 percent to $79.21 a barrel.

Spot gold reached $1,314.85 an ounce while U.S. gold futures for December delivery also hit a record $1,316.20 an ounce before bullion prices headed south.

Asian stocks outside Japan fell 0.4 percent but were set for their best quarter in a year as investors poured money into regional markets on the back of robust Chinese-driven growth.

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> has gained more than 17 percent this quarter.

Japan's Nikkei <.N225> ended 2 percent lower but still posted its best monthly performance in six. On a quarterly basis the Nikkei is flat, sharply lagging other major markets. (Reporting by Edward Krudy, Gertrude Chavez-Dreyfuss, Emily Flitter in New York; Catherine Bremer, Amanda Cooper, Zaida Espana and Ikuko Kurahone in London; Blaise Robinson in Paris; Editing by Padraic Cassidy)