* Oil prices tumble to 12-year lows
* U.S. indexes drop, give up earlier gains
* Pan-European index edges down
* China stocks tumble 5 pct
(Updates with afternoon trading)
By Lewis Krauskopf
NEW YORK, Jan 11 (Reuters) - Wall Street and European stock
markets fell on Monday, worsening a brutal start to 2016, as a
plunge in beaten-down oil prices and a fresh tumble for Chinese
shares gave investors more reasons to sell.
After rising in morning trading, the major U.S. indexes
reversed course and were set for another down day after the S&P
500 and the Dow last week posted their worst five-day start to
the year in history.
The pan-European FTSEurofirst 300 index .FTEU3 also gave
up initial gains and ended down 0.4 percent.
Fears over China's economy contributed to last week's
declines, and China's main stock indexes .SSEC .CSI300 each
dropped more than 5 percent on Monday. Oil prices fell to new
12-year lows, as concerns over China hurt commodity prices
broadly.
"The market has been looking for reasons to be negative and
China and oil are two of the most convenient reasons today,"
said Michael Holland, chairman of investment company Holland &
Co in New York. "That's what happens in market cycles ... right
now we people simply have searching for reasons to be negative."
The Dow Jones industrial average .DJI was down 20.61
points, or 0.13 percent, at 16,325.84, the S&P 500 .SPX lost
7.92 points, or 0.41 percent, at 1,914.11 and the Nasdaq
Composite .IXIC fell 31.13 points, or 0.67 percent, at
4,612.50.
Energy shares .SPNY led declines, while the healthcare
sector .SPXHC fell 2 percent, as Celgene Corp CELG.O weighed
after posting disappointing financial outlook.
Investors were looking to U.S. corporate earnings to help
provide confidence, with Alcoa (N:AA) AA.N posting results later on
Monday and major banks reporting later this week, despite
expectations for a second consecutive quarter of overall
declining earnings.
"The mentality has been pretty negative and I don't see that
changing this morning or today until there is more meat on the
bones from a data standpoint," said Michael James, managing
director of equity trading at Wedbush Securities in Los Angeles.
MSCI's broadest gauge of stocks globally .MIWD00000PUS
slipped 0.7 percent, after registering its biggest weekly
decline in more than four years.
Oil prices declined for a sixth straight session to start
the new year, as traders cited fears over slowing demand in
China.
U.S. crude prices CLc1 settled down 5.3 percent to $31.41
a barrel, while benchmark Brent LCOc1 dropped 6 percent to
$31.55 a barrel.
"The focus is still on China and the demand concerns in
China moving forward into 2016," said Tony Headrick, an energy
market analyst at CHS Hedging LLC.
Still, U.S. Treasury yields inched higher as concerns over
global growth eased, leading traders to sell some safe-haven
U.S. government debt.
Benchmark 10-year notes US10YT=RR were down 8/32 in price
to yield 2.1595 percent, from 2.131 percent late on Friday.
"Last week, Treasuries rallied because Chinese stocks fell
and today Chinese stocks fell, but we didn't rally, suggesting
the panic from last week seems to have subsided," said Ian
Lyngen, senior government bond strategist at CRT Capital in
Stamford, Connecticut.
The U.S. dollar .DXY was up 0.2 percent against a basket
of currencies, while the euro fell 0.5 percent against the
dollar.
Copper prices CMCU3 fell 2.3 percent to 6-1/2-year lows as
the Chinese stock declines reinforced worries about demand in
the world's biggest consumer of industrial metals.
Spot gold XAU= fell 0.7 percent but still hovered at more
than two-month highs.
The 19-market Thomson Reuters CoreCommodity Index .TRJCRB
sank 2.7 percent to a 13-1/2-year low.
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China's volatile markets http://link.reuters.com/myh35w
Currencies vs dollar http://link.reuters.com/tak27s
Oil prices http://link.reuters.com/beb23v
Commodities performance http://link.reuters.com/rac73w
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