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US STOCKS-Wall St edges lower on Europe, data

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* European shares hit fresh 2012 low

* Philly Fed lowest since September, leading indicators miss

* Wal-Mart shares rise after results, GameStop down

* Indexes off: Dow 0.5 pct, S&P 0.7 pct, Nasdaq 1 pct

(Adds details, comments, updates trading)

By Ryan Vlastelica

NEW YORK, May 17 (Reuters) - U.S. stocks fell on Thursday, with the S&P on track for a fifth straight day of declines as weak economic data spooked investors already concerned about the ongoing situation in Europe.

A gauge of future U.S. economic activity fell in April for the first time in seven months and the Philadelphia Fed business conditions index hit its lowest since September, compounding worries about a struggling economic recovery.

Spain's El Mundo newspaper reported that customers at troubled Spanish lender Bankia had withdrawn more than 1 billion euros over the past week, though the Spanish government denied the report. Bankia shares

fell 14 percent after sliding as much as 30 percent earlier.

News that some Greek banks face emergency funding needs hurt sentiment and caused a further decline in risk assets which have already dropped over the past weeks. The CBOE volatility index

rose 1.5 percent hit its highest level since mid-January.

"Europe continues to drive sentiment, and it continues to be negative, while in addition today's data was mediocre overall. That's causing people to take risk off the table," said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver.

Greek politicians who reject conditions for a bailout which is keeping the country's finances afloat are likely to win next month's election, adding to worries about Greece leaving the euro zone.

Spain's medium-term borrowing costs rose sharply in a Thursday auction of 3- and 4- year bonds, hardly affecting broad views that Spanish yields are likely to rise further in coming weeks.

The Dow Jones industrial average

was down 67.59 points, or 0.54 percent, at 12,530.96. The Standard & Poor's 500 Index

was down 9.05 points, or 0.68 percent, at 1,315.75. The Nasdaq Composite Index

was down 31.37 points, or 1.09 percent, at 2,842.67.

The S&P has fallen 5.6 percent so far in May, and while volatility is expected to continue, the persistence of the losses have some analysts forecasting a near-term rebound.

"We're getting close to a time when people will step back into the market and we don't think that will be much lower from where we are now," Sorensen said. "The U.S. is still growing and still looks pretty good relative to the rest of the world."

Giving investors some respite, Japan's economy grew 1.0 percent in the first quarter, slightly more than expected. A 0.2 percent contraction in the final quarter of 2011 for the world's third-largest economy was revised up to flat.

The pan-European FTSEurofirst 300 index

fell 1.1 percent after hitting a fresh 2012 low. A gauge of European bank stocks

dropped 2.5 percent.

Wal-Mart

shares jumped 5.1 percent after the world's largest retailer reported better-than-expected quarterly profit.

Sears Holdings Corp

surged 11 percent after the company said it plans to spin off a large part of its stake in its Canada unit to better focus on its U.S. business.

On the downside, GameStop Corp

fell 8.3 percent to $19.10, the biggest decliner on the S&P, after it forecast second-quarter earnings that were below expectations.

(Editing by Dave Zimmerman)

((ryan.vlastelica@thomsonreuters.com)(Tel: +1 646-223-6014)(Reuters Messaging: ryan.vlastelica@reuters.com@reuters.net))

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