(Updates prices, includes U.S. data)
By Lincoln Feast
LONDON, Oct 27 (Reuters) - Investors trimmed their risk exposure on Thursday, selling stocks and buying safe haven assets such as U.S. Treasuries on news that troubled car makeris facing a regulatory probe.
The dollar fell against the yen on the overnight GM news after hitting a two-year peak above 116 yen .
The dollar's slide increased the attraction of precious metals like platinum, which climbed to its highest level since 1980 on what traders said was speculative buying by funds.
U.S. stocks futures indicated a weaker start on Wall Street, little moved by data showing a sharper-than-expected fall in both U.S. September durable goods and weekly jobless claims.
On one of the busiest days of the third-quarter reporting season, the FTSEurofirst300 index of leading European shares fell 0.9 percent to 1,176 points.
France Telecom led the way down, tumbling 5.5 percent after cutting its 2005 sales forecast but other companies including telecoms equipment maker Alcatel and supermarket group Ahold also fell sharply on concerns about their outlooks.
"The problem at the moment is that earnings growth generally is peaking so investors are paying attention to sectors where you've got quality earnings and earnings momentum," said Michael O'Sullivan, a strategist at State Street Global Markets.
"Those kinds of sectors are still largely the metals, the materials, the oils."
Supporting that view Royal Dutch Shell rose 1.4 percent after reporting a record quarterly profit which beat expectations.
GM RIPPLES The auto sector fell around 0.9 percent, faring no worse than most other sectors despite GM saying it had been subpoenaed by the U.S. Securities and Exchange Commission.
GM corporate bonds eased and its shares traded almost 3 percent lower in pre-market.
GM said the subpoenas related to its financial reporting for pension and other post-employment benefits, and to transactions between it and auto parts supplierCorp. .
The news sparked some speculation that the Detroit-based car giant could be forced to file for Chapter 11 bankruptcy protection, a move GM strongly denied.
Ripples from the GM news were felt in other financial markets, with U.S. Treasury yields retreating from Wednesday's seven-month highs.
"We have seen overnight U.S. Treasuries definitely moving somewhat higher on this GM story and a flight-to-quality move," said Bob Maes, fixed-income strategist at KBC.
The yield on benchmark U.S. 10-year notes were at 4.56 percent from a peak of 4.61 percent, but euro zone 10-year yields were little moved at 3.37 percent.
European government bonds underperformed after upbeat German consumer confidence data and after more hawkish comments from European Central Bank officials about the dangers of inflation.
Those comments helped the euro climb to $1.2150, its highest level in more than two weeks against the dollar, which also fell more than half a percent against the yen.
"Real money investors are adjusting their portfolios and they seem less inclined toward dollar assets," said Mitul Kotecha, head of foreign exchange research at Calyon.
Shares in Asia dipped amid concerns about earnings and problems at GM. Japan's Nikkei ended down 0.2 percent and South Korean shares shed 1.1 percent.
Along with government bonds, commodity markets benefited from the weakness in stocks.
Platinum hit a 25-1/2 year high of $944 an ounce while gold rebounded after dropping nearly $2 on Wednesday.
Crude oil futures rose above $61 a barrel amid concerns about demand for heating oil going into the northern hemisphere winter.