* Oil dives about 2 percent
* Dow, S&P 500 retreat from record levels
* Comments from Fed officials lift U.S. dollar (Updates with U.S. market close)
By Chuck Mikolajczak
NEW YORK, June 20 (Reuters) - World stock markets fell on Tuesday as a drop in oil prices weighed on the energy sector, while hawkish comments from several U.S. Federal Reserve officials pushed the U.S. dollar to a one-month high.
Oil fell about 2 percent, with Brent settling at seven-month lows and U.S. crude at its cheapest since September, after increased supply from several key producers overshadowed high compliance by OPEC and non-OPEC oil producers with a deal to cut global output. slide weighed down energy stocks on Wall Street and in Europe. The S&P energy index .SPNY dropped 1.3 percent as the worst performing of the 11 major S&P sectors and Europe's oil and gas sector .SXEP slumped 2.2 percent.
"People really thought $45 to $55 was kind of the range of oil, but it is getting weaker and weaker and U.S. producers are getting more and more efficient," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York
"So if that is the case, they are going to keep pumping."
U.S. crude CLc1 settled down 2.2 percent at $43.23 per barrel and Brent LCOc1 settled 1.9 percent lower at $46.02.
The drop put U.S. crude in a bear market, traditionally defined as a drop of more than 20 percent from a recent high.
The Dow Jones Industrial Average .DJI fell 61.85 points, or 0.29 percent, to 21,467.14, the S&P 500 .SPX lost 16.43 points, or 0.67 percent, to 2,437.03 and the Nasdaq Composite .IXIC dropped 50.98 points, or 0.82 percent, to 6,188.03.
The Dow and benchmark S&P 500 hit fresh records on Monday, buoyed by a rebound in the tech sector.
The pan-European FTSEurofirst 300 index .FTEU3 lost 0.66 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.69 percent.
The U.S. dollar strengthened for a second day, hitting a one-month high of 97.871 against a basket of major currencies as Federal Reserve officials maintained a hawkish tone on hiking interest rates. Monday, New York Fed President William Dudley said halting the rate-hiking cycle now would imperil the economy. That was followed by Boston Fed President Eric Rosengren, who said on Tuesday the era of low interest rates in the United States and elsewhere poses financial stability risks. addition, Chicago Federal Reserve Bank President Charles Evans said he was increasingly concerned that a recent softness in inflation is a sign the Fed will struggle to get price pressures back to its 2 percent objective. Dallas Federal Reserve President Robert Kaplan said the Fed needs to be careful about raising U.S. interest rates further due to low rates on 10-year Treasuries. dollar index .DXY rose 0.24 percent, with the euro EUR= down 0.2 percent to $1.1126. The greenback is up nearly 1 percent for the month. GBP= was last trading at $1.2624, down 0.85 percent on the day. Bank of England Governor Mark Carney doused speculation that he might soon back higher interest rates, telling bankers on Tuesday that he first wanted to see how the economy coped with Brexit talks in coming months. 10-year Treasury notes US10YT=RR last rose 9/32 in price to yield 2.1565 percent, down from 2.188 percent late on Monday. Global assets in 2017
http://reut.rs/1WAiOSC Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Global bonds dashboard
http://tmsnrt.rs/2fPTds0
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