April 5, 2012 / 9:38 PM / 5 years ago

US SMALL/MIDCAPS-Europe scare also hits smaller stocks

NEW YORK, April 5 (Reuters) - Midcap stocks closed their worst week this year on Thursday, while smallcaps ended down for the first week in five as debt troubles in Europe resurfaced.

Spanish benchmark debt yields rose for a third day as the hangover from a weak debt auction earlier in the week stirred worries about the country's ability to tackle its fiscal problems.

After a stellar first quarter for stocks, the problems in Europe are adding to growing concerns that the rally was overextended and support for it fading.

"There is a growing concern with regard to the possibility of a pullback ... starting in May when you get seasonal slowdowns in business and in the fund industry," said Marc Pado, U.S. market strategist at DowBull.com in San Francisco.

The S&P MidCap 400 index fell 0.4 percent on Thursday and 1 percent for the week, its biggest weekly drop since mid December.

The S&P SmallCap 600 index dropped 0.25 percent for the day and 1.2 percent for the week.

In comparison, the benchmark S&P 500 was mostly flat Thursday. Its 0.7 percent weekly decline was also the biggest this year.

U.S. stock markets will be closed Friday for a holiday.

Spain's benchmark bond yield closed at 5.773 percent, the highest since mid-December. Stocks globally were shunned last year during flare-ups of the euro zone's debt crisis.

Among small and midcap sectors, Thursday saw the largest declines in energy and utilities as front-month U.S. natural gas futures ended just above a 10-year low.

The S&P midcap utilities index dropped 1 percent, while energy smallcaps fell 0.9 percent.

Parametric Technology Corp shares dropped 21.1 percent to $21.46 after the maker of product-design software lowered its expectations for the second quarter as it failed to close a large contract in Europe.

Polycom Inc lost one-fifth of its market value after the videoconferencing company lowered its outlook for first-quarter revenue and forecast a profit well below analysts' expectations.

Shares closed down 20 percent at $14.56.

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