* Oil slides after Saudi output comments
* Safe-haven yen, government debt in demand
* Global gauge of stocks drops the most in three weeks
(Adds U.S. markets, changes dateline from previous LONDON)
By Rodrigo Campos
NEW YORK, Feb 24 (Reuters) - Stocks across the globe fell
the most in three weeks on Wednesday, tracking oil prices lower,
while the first contraction in the U.S. services sector since
October 2013 weighed further on financial stocks.
A move towards safety assets lifted top-rated government
bond prices, gold and the yen.
Crude futures prices dropped after Saudi Arabia ruled out
production cuts and an industry report said U.S. crude
stockpiles hit record levels, underlining the supply glut.
Wall Street opened broadly lower, with bank and consumer
stocks leading the way down.
The slide in oil prices and weak U.S. data drew investors
away from financial stocks on concerns the sector's exposure to
energy companies is larger than thought. The Federal Reserve is
also going to find it hard to raise interest rates in the near
future, said Art Hogan, chief market strategist at Wunderlich
Securities in New York.
"It's a combination of low interest rates for longer and the
possibility of a bigger exposure to energy - which is not
logical, but understandable."
The Dow Jones industrial average .DJI fell 220.58 points,
or 1.34 percent, to 16,211.2, the S&P 500 .SPX lost 24.34
points, or 1.27 percent, to 1,896.93 and the Nasdaq Composite
.IXIC dropped 58.69 points, or 1.3 percent, to 4,444.90.
The pan-European FTSEurofirst 300 share index .FTEU3 fell
2.5 percent and MSCI's gauge of stocks globally .MIWD00000PUS
fell 1.5 percent.
YEN RALLIES, DOLLAR DROPS
In currency markets the yen JPY= , often sought by
investors as a shelter when riskier assets are under pressure,
hit an almost three-year high against the euro EURJPY= of
122.43 yen.
The euro EUR= edged 0.2 percent higher versus the
greenback at $1.1037. The dollar index .DXY slipped 0.2
percent.
Sterling plumbed a seven-year low around $1.3876 on concern
Britons might vote to leave the European Union in a June
referendum. It last traded at $1.3946 GBP , shaving half of the
session's loss.
Oil prices remained weak after Saudi Oil Minister Ali
Al-Naimi told oil executives on Tuesday that markets should not
view the agreement by four major oil producers to freeze output
at January levels as a prelude to production cuts.
Brent crude LCOc1 , the global benchmark, slid 1.5 percent
to $32.77 a barrel. U.S. crude CLc1 dropped 3.2 percent to
$30.85.
"Al-Naimi's remarks punctured an oil-price rally that has
lacked substance," said David Hufton of broker PVM. "The market
correctly interpreted the presentation as bearish."
The fall in stocks and oil pushed down yields on the
lowest-risk government bonds. Benchmark 10-year U.S. notes
US10YT=RR were last up 21/32 in price to yield 1.6745 percent,
down from 1.745 percent late Tuesday.
Copper CMCU3 fell 0.6 percent at $4,617.50 a tonne.
Gold XAU= jumped 1.7 percent, extending its two-day run to
more than 3 percent.