* Oil weakens on doubt over output deal
* Miners, banks fall back on energy concerns
* Sterling still under Brexit pressure
(Updates with close of U.S. markets, oil settlement prices)
By Chuck Mikolajczak
NEW YORK, Feb 23 (Reuters) - Global equity markets slumped
on Tuesday, denting the recent recovery in riskier assets as oil
prices tumbled on signs that a proposed deal to freeze output by
major producers was not on the horizon.
After gains of more than 5 percent on Monday, which had
helped push a gauge of world equities up more than 1 percent,
both Brent LCOc1 and U.S. crude CLc1 turned sharply lower
after Saudi Oil Minister Ali Al-Naimi said he welcomed all
sources of supply, while Iran was seen as unlikely to agree to
an output cap.
The decline in crude weighed on both the energy .SPNY and
financial .SPSY sectors on Wall Street. Concerns about bank
exposure to the energy sector were highlighted by JP Morgan's
JPM.N announcement that it will put aside an additional $500
million to cover potentially bad loans to energy companies.
Markets have been closely tethered to oil prices, which have
been volatile based on the continually changing perceptions that
an output deal could be reached.
"The markets are really worried that we are missing
something here - that the global slowdown may be more
significant than we are recognizing and that slowdown could be
causing oil prices to drop," said Tracie McMillion, head of
asset allocation at Wells Fargo (N:WFC) Private Bank in Winston-Salem,
North Carolina.
U.S. crude futures settled down 4.6 percent at $31.87 a
barrel and Brent LCOc1 settled 4.1 percent lower at $33.27 a
barrel. The commodity had shown signs of stabilization above $30
a barrel recently on hopes a production freeze by major
producers could be agreed upon.
The Dow Jones industrial average .DJI fell 188.88 points,
or 1.14 percent, to 16,431.78, the S&P 500 .SPX lost 24.23
points, or 1.25 percent, to 1,921.27 and the Nasdaq Composite
.IXIC dropped 67.02 points, or 1.47 percent, to 4,503.58.
European shares also moved lower on the crude weakness,
along with and disappointing updates from Standard Chartered
STAN.L , down 6.7 percent, and BHP Billiton BLT.L , down 6.1
percent. A weak sentiment reading of German manufacturers also
raised concerns about the health of the region's largest
economy.
Resources stocks .SXPP , down 3.2 percent, weighed heavily
on European equity indices after the world's largest miner, BHP
Billiton, posted its first loss in 16 years.
The pan-European FTSEurofirst 300 .FTEU3 index of leading
shares closed down 1.3 percent. MSCI's index of world shares
.MIWD00000PUS was lost 0.92 percent.
In currency markets, the British pound GBP= remained under
pressure, and was down 2.7 percent on the past two sessions, its
biggest two-day drop in six years, on worries Britain may leave
the European Union. Sterling was last down 0.83 percent at
1.403.
The euro EUR= also fell to $1.0987 on Monday, its lowest
in almost three weeks, on fears Brexit could undermine the
European Union. It was last down 0.13 percent at $1.1012.
Investors' shift towards safer ground on Tuesday pushed the
dollar lower against the yen, down 0.7 percent to 112.10 yen
JPY= after hitting a low of 111.75.
The dollar's index against a basket of six major currencies
.DXY was little changed, up 0.09 percent at 97.467
Benchmark 10-year U.S. Treasuries reversed earlier losses
and were last up 8/32 in price to yield 1.7380 percent.
Year-to-date asset performance http://fingfx.thomsonreuters.com/2014/05/01/1605285136.htm
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(Editing by Nick Zieminski)