GLOBAL MARKETS-Stocks fall after Japan earthquake

* European stocks rise on EU bailout for Portugal

* ECB raises rates, euro weaker

* Wall Street falls after strong earthquake in Japan

* Gold, corn at new record highs

(Recasts, adds Japan, quote, updates prices)

By Leah Schnurr

NEW YORK, April 7 (Reuters) – Global equities fell after a
strong earthquake shook Japan and the euro fell against the
dollar as the European Central Bank raised rates but signaled
it was not necessarily the start of a round of hikes.

U.S. stocks slid to session lows after the earthquake
measuring 7.4 shook northeast and eastern Japan. A tsunami
warning was issued for the northeastern coast, an area badly
hit by March’s earthquake.

European stocks fell following the news and the dollar
extended losses against the yen. Nikkei futures were down 1.8
percent.

“We started to drop on this earthquake news out of Japan.
It seems to be generating a bit of jitteriness and has caused
people to take a bit of profit,” said Nick Kalivas, senior
equity index analyst at MF Global in Chicago.

“In a couple hours from now if it looks like damage is
minimal, the market the will go back to trading economics as
opposed to earthquakes.”

European shares had earlier gained after Portugal’s request
for aid fostered hopes the region’s debt crisis will be
staunched. The pan-European European FTSEurofirst 300 stock
index (.FTEU3: Quote, Profile, Research) was down 0.2 percent

The Dow Jones industrial average (.DJI: Quote, Profile, Research) fell 56.01 points,
or 0.45 percent, to 12,370.74. The Standard & Poor’s 500 Index
(.SPX: Quote, Profile, Research) slipped 3.91 points, or 0.29 percent, to 1,331.63. The
Nasdaq Composite Index (.IXIC: Quote, Profile, Research) lost 6.05 points, or 0.22
percent, to 2,793.77.

World stocks as measured by MSCI (.MIWD00000PUS: Quote, Profile, Research) were weak,
dipping 0.2 percent

RATE HIKE

The ECB raised rates by 25 basis points to 1.25 percent to
counter firming inflation pressures. ECB President Jean-Claude
Trichet said it was not necessarily the start of a series of
similar steps, disappointing some who had expected a more
hawkish tone. For details, see [ID:nLDE7351QH]

“This makes the ECB the first major developed economy
central bank to hike rates, and the decision will cement its
reputation as a single-minded inflation fighter,” said ABN Amro
economist Nick Kounis.

“The hike is unwelcome for peripheral countries, but
arguably the core member states were in need of this move
already some time ago. In that sense, the timing of the
increase is a balancing act, which is part and parcel of the
one-size-fits-all monetary policy,” he added.

The euro (EUR=: Quote, Profile, Research) was down against the dollar but pared
earlier losses and was recently off about 0.3 percent at
$1.4291. Spot gold (XAU=: Quote, Profile, Research) hit a new record at $1,464.80 an
ounce following Trichet’s comments.

It was the first rate increase since 2008 and followed a
day after Portugal’s caretaker government requested European
Union aid at the urging of leading bankers. They wanted a
bailout to help the economy and safeguard its banking system.

Portugal said it will make the formal request for aid later
on Thursday. Lisbon has not yet said how much it will need.
[ID:nLSB001088]

Further contagion in the debt crisis was not being ruled
out, but other countries that have been struggling, notably
Spain, are less likely to be drawn in.

Investors got more signs of a firming labor market as new
U.S. claims for unemployment benefits fell slightly more than
expected last week. Other data showed March was not as bad as
expected for many U.S. retailers even in the face of higher
gasoline prices. [ID:nN0784911] [ID:nN07294366]

Among commodities, spot gold was recently bid at $1,464.12
an ounce after hitting a new peak, while Chicago corn futures
(Cc1: Quote, Profile, Research) reached a fresh all-time high at $7.73-1/4 on inventory
concerns.

(Additional reporting by Rodrigo Campos and Nick Olivari in
New York, Lucia Mutikani in Washington, Paul Carrel in
Frankfurt; Editing by Andrew Hay)

GLOBAL MARKETS-Stocks fall after Japan earthquake