(Reuters) - Technology shares dragged U.S. stocks lower on Thursday as disappointing Cisco earningsovershadowed stronger-than-expected data on weekly unemployment benefits claims.

Also weighing on equities were higher yields for indebted European countries, which reflected concern over the lack of a concrete policy to tackle the euro zone's debt crisis. The U.S. dollar gained versus the euro and pulled commodity prices lower.

The S&P basic materials sector .GSPM fell 0.5 percent.

Cisco Systems Inc (CSCO.O) shares slid 12 percent to $19.40 a day after the network equipment maker warned about dwindling public spending and reported weaker quarterly margins.

New U.S. claims for unemployment benefits dropped to their lowest in 2-1/2 years, the government said, in a sign the labor market was improving.

"Results were not overwhelming, so the market hasn't had that much of a reaction (to the better data), at least so far," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.

"We could be seeing a little bit of profit taking."

The Dow Jones industrial average .DJI dropped 48.59 points, or 0.40 percent, to 12,191.30. The Standard & Poor's 500 .SPX fell 5.55 points, or 0.42 percent, to 1,315.33. The Nasdaq Composite.IXIC lost 23.41 points, or 0.84 percent, to 2,765.66.

The chart for the S&P 500 index shows near-term technical support at the 1,313 level, getting stronger near 1,300.

Some traders pointed to weakness in stocks as a buying opportunity.

(Reporting by Rodrigo Campos, additional reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

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