US STOCKS-Wall St falls amid Greece worries, China tumble

* Weekly jobless claims rise unexpectedly

* Avago rises after agreeing to buy Broadcom (NasdaqGS: BRCM - news) for $37 bln

* Abercrombie & Fitch (NYSE: ANF - news) rises after positive forecast

* Indexes down: Dow 0.29 pct, S&P 0.2 pct, Nasdaq 0.27 pct (Adds details, updates prices)

By Sweta Singh

May 28 (Reuters) - U.S. stocks fell in early trading on Thursday amid concerns about a Greek default, a tumble in Chinese shares and an unexpected rise in weekly jobless claims.

European officials downplayed talk that Greece and its lenders were drafting an agreement that would provide Athens much-needed debt relief.

World markets (Xetra: 4WM.DE - news) were also under pressure after investors in China said several major brokerages had tightened requirements on margin financing, triggering fears of further steps to reduce leverage in the red-hot market.

Initial claims for state unemployment benefits rose to a seasonally adjusted 282,000 for the week ended May 23, the Labor Department said on Thursday. Economists on average had expected claims falling to 270,000.

Wednesday was the strongest day for the S&P 500 since May 14 and the Nasdaq Composite's strongest since late January, lifting it to its first record close since April 24.

However, low volumes and muted trading activity at the start of summer suggested the gains were not sustainable.

"There is a loss of liquidity in the market," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

"Investors should party as long as the music is playing because once it stops you're going to have to deal with the headache."

At 9:51 a.m. EDT (1351 GMT) the Dow Jones industrial average was down 51.89 points, or 0.29 percent, at 18,111.1, the S&P 500 was down 4.16 points, or 0.2 percent, at 2,119.32 and the Nasdaq Composite was down 13.54 points, or 0.27 percent, at 5,093.05.

Nine of the 10 major S&P 500 sectors were lower, with the energy sector's falling the most at 0.51 percent.

Avago shares fell 1.5 percent to $139.41, reversing course after touching a record high. Avago agreed to buy fellow chipmaker Broadcom for $37 billion. Broadcom fell 2.9 percent to $55.53. Both stocks had risen strongly on Wednesday on reports of an imminent deal.

Abercrombie & Fitch rose 9.6 percent to $21.53 after the teen apparel retailer said it expects comparable sales to improve in the second half of the year.

GoPro (Xetra: A1XE7G - news) jumped 6.5 percent to $56.73 on reports that the action camera maker will launch a new spherical camera mount and a drone.

Sanderson Farms (NasdaqGS: SAFM - news) fell 4 percent to $81.11 after the third-largest U.S. poultry producer reported lower-than-expected quarterly net sales and profit.

Declining issues outnumbered advancers on the NYSE by 1,906 to 812, for a 2.35-to-1 ratio on the downside. On the Nasdaq, 1,473 issues fell and 810 advanced for a 1.82-to-1 ratio favoring decliners.

The S&P index showed 11 new 52-week highs and five new lows, while the Nasdaq recorded 44 new highs and 19 new lows. (Additional reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)