U.S. economy shows signs of weakness

By Caroline Valetkevitch

NEW YORK (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.

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

Worries the United States may suffer a cut to its triple-A rating pushed down stocks, bonds and the dollar.

Investors fear the United States is "going the way of the UK," Bill Gross, co-chief investment officer at bond giant Pacific Investment Management, told Reuters.

All three major U.S. stock indexes .N closed down more than 1.5 percent, while European shares .FTEU3 fell 2.1 percent, breaking five straight sessions of gains. <MKTS/GLOB>

The benchmark 10-year U.S. Treasury note eased and the dollar dropped to its lowest level this year against major currencies .DXY.

"No one wants to admit it but there might be investors nervous enough with the extreme levels of indebtedness of the U.S. government so that just the thought of a downgrade would provide an excuse to sell dollars," said Matt Esteve, a trader at Tempus Consulting in Washington.