NEW YORK (Reuters) - The cost of protecting Bear Stearns'<BSC.N> debt with credit default swaps surged by 120 basis points on Thursday amid ongoing concerns about liquidity issues at the investment bank.

Bear Stearns' credit default swaps rose to 700 basis points, or $700,000 a year for five years to protect $10 million of debt, up from 580 basis points at Wednesday's close, according to data from Phoenix Partners Group. Bear Stearns has denied talk that it faces a cash crunch.

(Reporting by Dena Aubin; Editing by Theodore d'Afflisio)