TOPWRAP 8-Debt fears cloud economic recovery picture

* Borrowing cost fears dim optimism

* Sales of new U.S. homes below expectations

* GM bondholders support revised swap offer

* U.S. Durable Goods orders rise, jobless claims down

* Euro zone business climate index up though off low base

By Patricia Zengerle

WASHINGTON, May 28 (Reuters) - Concerns about mounting government debt and a disappointing U.S. home sales report on Thursday dampened optimism over better durable goods orders and other data suggesting that the economic slump could be abating.

The recent sharp rise in government bond yields around the world focused attention on growing fears that the debt being amassed as Western governments battle to keep economies afloat will push up borrowing costs for businesses and consumers, choking any recovery.

Also dimming outlooks was news that sales of newly built U.S. single-family homes rose slightly less than expected in April, and of a downward revision in the figures for March. [nN19590716]