* Stock indexes extend decline to third straight day
* Index of top European shares hits lowest since Sept '13
* U.S. 10-yr Treasury yields touch 1-yr lows
* Market declines, oversupply drag oil prices lower
(Updates to open of U.S. trading, changes byline, dateline; pvs
LONDON)
By Sam Forgione
NEW YORK, Feb 9 (Reuters) - Stock indexes worldwide tumbled
for the third straight session on Tuesday on fears of slowing
global growth, with particular concern around the health of the
banking sector, while benchmark U.S. Treasury yields hit fresh
one-year lows.
The European banking index .SX7P fell 4.6 percent after
sinking 5.6 percent on Monday on fears of worsening bank
profitability and capital strength from sustained low interest
rates.
Deutsche Bank shares DBKGn.DE fell 4.1 percent after
slumping 9.5 percent on Monday on concerns about its ability to
maintain bond payments. Shares of U.S. banks also stumbled, with
the S&P financial index last down over 1 percent.
U.S. shares recovered ground on improvement in technology
stocks, but all three major U.S. indexes were flat to lower,
with losses being felt in energy and financial stocks. Stocks
lost more than 1 percent Monday.
"The general thematic (risk) continues to be the European
banking situation that has unhinged the risk market and slowly
crept into the credit markets," said Chad Morganlander,
portfolio manager at Stifel, Nicolaus & Co in Florham Park, New
Jersey.
The FTSEurofirst 300 index slumped but was off its lowest
level since Sept. 2013, which was touched earlier in the
session.
Turmoil in Asia set the tone for the session, with yields on
longer-term Japanese bonds falling below zero for the first time
and Japan's Nikkei .N225 plummeting 5.4 percent. Chinese
markets are closed through the week for the Lunar New Year.
MSCI's all-country world equity index .MIWD00000PUS was
last down 2.25 points, or 0.62 percent, at 358.56.
The Dow Jones industrial average .DJI was last down 32.19
points, or 0.2 percent, at 15,994.86. The S&P 500 .SPX was
down 1.29 points, or 0.07 percent, at 1,852.15. The Nasdaq
Composite .IXIC was up 1.77 points, or 0.04 percent, at
4,285.53.
The FTSEurofirst 300 index .FTEU3 ended down 1.4 percent
at 1,222.11.
Yields on benchmark 10-year Treasury notes US10YT=RR ,
known for their relative safety, extended Monday's declines to
hit 1.682 percent, their lowest in a year. The notes were last
up 3/32 in price to yield 1.7226, from a yield of 1.735 percent
late Monday.
Gold, another safe-haven asset, rose in price and was just
below the 7 1/2-month high struck the previous day.
Oil prices fell, dragged lower by the broad decline across
major financial markets and by a growing expectation that global
demand will not grow quickly enough to erase the overhang of
unwanted crude any time soon.
Brent crude LCOc1 was last down 89 cents at $32 a barrel.
U.S. crude CLc1 was last down 24 cents at $29.46 per barrel.
The U.S. dollar extended its drop against the safe-haven
Japanese yen, hitting its lowest against the yen since Nov. 2014
for the second straight session. The concerns also
caused the Mexican peso MXN= to hit an all-time low against
the dollar.
"Markets were very risk-averse out of the gate this week,
and it's continued today," said Richard Franulovich, senior
currency strategist at Westpac Banking Corp in New York.
Spot gold prices XAU= were last up $2.2 at $1,192.96 an
ounce.