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GLOBAL MARKETS-Stock indexes up slightly as Portugal fears ebb; oil down sharply

sharply@ (Updates to close of U.S. markets, adds investor comment)

NEW YORK, July 11 (Reuters) - Major global equities markets edged higher and the yen stabilized against the U.S. dollar on Friday as worries about Portugal's biggest bank ebbed, while oil prices dropped on easing concern about supply losses in the Middle East.

MSCI's All-World Index, however, was still down 1.4 percent for the week, while the Standard & Poor's 500 index posted its worst week since April.

Early U.S. earnings reports sparked some caution for U.S. stock investors, with Well Fargo's shares down 0.62 percent after the bank for the first time since 2009 did not increase its earnings-per-share from the preceding quarter.

Portugal's PSI 20 index rose 0.62 percent after the country's largest bank, Banco Espirito Santo, said late on Thursday that loan losses that hit its founding family would not put the bank at risk of running short of capital.

Shares in Portugal's largest listed lender fell 36 percent this week, its worst week on record.

The calmer market enabled Italy to sell 7.5 billion euros of bonds, the top of its targeted range, in an auction that sharply contrasted with Greece's three-year bond sale on Thursday, in which demand was hurt by fallout from Portugal.

"Issues within Portugal's banking system... will be minimized and contained within their system and the global economy is in a much better position to handle such risks," said Bryan Novak, director of trading at Astor Investment Management in Chicago.

The Dow Jones industrial average closed up 28.74 points, or 0.17 percent, at 16,943.81. The Standard & Poor's 500 Index was up 2.89 points, or 0.15 percent, at 1,967.57. The Nasdaq Composite Index was up 19.29 points, or 0.44 percent, at 4,415.49. The S&P 500 fell 0.9 percent for the week.

"Wells came in a little light, and while there was nothing really wrong with the quarter, it is one of the few banks that can be counted on to beat profit expectations and that didn't happen," said Matthew Kaufler, portfolio manager at Federated Investors in Rochester, New York.

The MSCI world equity index rose 0.06 percent, while the pan-European FTSEurofirst 300 index closed up 0.16 percent.

Currency markets were mostly steady, with the dollar 0.02 percent lower against the yen at 101.31. The euro was unchanged against the dollar at $1.3608.

U.S. Treasury bond prices rose on safe-haven demand stemming partly from lingering worries about Portugal. Appetite for Treasuries was also stoked by the minutes of the U.S. Federal Reserve's June policy meeting released on Wednesday, which hinted that the central bank is likely to cling to its near-zero interest rate policy until the second half of 2015.

Benchmark 10-year Treasuries were up 4/32 in price to yield 2.518 percent.

As tensions in the Middle East showed little sign of abating, Brent crude oil was off $2.17 at $106.53 a barrel in late trading. U.S. crude lost $2.21 to $100.72 per barrel.

(Additional reporting by Caroline Valetkevich, Lionel Laurent, Patrick Graham, Emelia Sithole-Matarise, Chris Vellacott and Tricia Wright in London,; and Ryan Vlastelica in New York; Editing by Larry King and Dan Grebler)