Oil drags down U.S. stocks; Greece jitters lift bonds

By Richard Leong

NEW YORK (Reuters) - U.S. stock prices slipped on Wednesday as weaker oil prices hurt energy shares, while uneasiness about a Greek government vote on whether it would accept tough terms for another bailout and protests against a debt deal spurred safe-haven bids for bonds.

Oil prices fell more than 2 percent due to worries of growing supply from Iran following a landmark deal that would lift sanctions that have curbed its oil sales for several years.

Protesters threw petrol bombs at Greek police outside parliament in Athens as lawmakers prepared to vote on a painful austerity package.

"It looks like investors are worried there could be a glitch there. I think the consensus is it's still going to pass the Greek parliament, but in the meantime, the buyers have stepped aside," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Wall Street took in stride Federal Reserve Chair Janet Yellen's affirmation of a likely interest rate increase by year-end. "If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate," she said in a testimony prepared for a U.S. House panel.

The Dow Jones industrial average closed down 3.41 points, or 0.02 percent, to 18,050.17, the S&P 500 ended 1.52 points, or 0.07 percent, lower at 2,107.43 and the Nasdaq Composite finished down 5.95 points, or 0.12 percent, to 5,098.94.

The dollar strengthened against a basket of currencies, with the dollar index last up 0.6 percent at 97.20 .

After receiving no fresh clues on the timing of a Fed rate increase, traders awaited whether Greece's parliament will approve a third bailout to avert bankruptcy and Greece's possible exit from the euro zone.

The euro was down 0.5 percent against the dollar at $1.09520 and 0.2 percent lower at 135.535 yen .

The pan-European FTSEurofirst 300 index closed up 0.4 percent at 1,586.50, rising five days in a row.

Uncertainties over the Greek vote outcome helped spur demand for bonds. Yields on 10-year German Bunds fell 9 basis points to 0.76 percent, while U.S. 10-year Treasuries yields declined 4 basis points to 2.358 percent.

Earlier, some Asian and emerging market stocks fell despite better-than-expected Chinese economic data.

In the oil market, Brent crude was down 1.46 cents or 2.50 percent at $57.05 a barrel, while U.S. oil futures settled down $1.63 or 3.07 percent at $51.41.

Spot gold prices were down 0.5 percent at $1,148.43 an ounce.

(Additional reporting by Sinead Carew, Caroline Valetkevitch in New York, Marius Zaharia in London, Lisa Twaronite in Tokyo and Emelia Sithole Matarise in London; Editing by Meredith Mazzilli and Nick Zieminski)