* U.S. jobless claims hit record, manufacturing contracts

* S&P downgrades Britain's outlook, AAA rating at risk

* Fears of U.S. ratings cut weigh on stocks, bonds, dollar

* Euro zone PMIs show slowing contraction

* Geithner says U.S. regulatory reforms coming soon (For full financial crisis coverage, click [nCRISIS])

By Caroline Valetkevitch

NEW YORK, May 21 (Reuters) - Data from the United States on jobless claims and business conditions on Thursday dented hopes of a quick economic rebound but euro zone countries showed that the worst recession in six decades may be easing.

In Britain, prospects were clouded by a warning over government debt and political uncertainty as Standard & Poor's lowered its outlook to "negative" and said it might cut the country's precious triple-A credit rating. [nLL627240]

"This is a reality check for the UK government," said Kenneth Broux, an economist at Lloyds TSB Corporate Markets.