* U.S. stocks down more than 1 pct
* Slim chance of Fed hike next week reduced after Brainard
* Dollar index inches up
* Oil down as IEA sees market oversupplied in first half of 2017 (Updates with European shares close)
By Caroline Valetkevitch
NEW YORK, Sept 13 (Reuters) - World stock markets and energy prices fell on Tuesday after both energy producers and consumers predicted an oil glut was likely to persist well into next year.
The International Energy Agency said a sharp slowdown in global oil demand growth, coupled with ballooning inventories and rising supply, mean the crude market will be oversupplied at least through the first six months of 2017. IEA's comments follow a surprisingly bearish outlook from the Organization of the Petroleum Exporting Countries (OPEC) on Monday that also pointed to a larger surplus next year.
Financial shares fell on weakened prospects of an interest rate hike in the near-term, adding to the negative tone in U.S. stocks, which were down more than 1 percent.
Volatility in stocks and other assets has picked up since Friday as investors have weighed chances of an interest rate hike at the Federal Reserve's Sept. 20-21 meeting.
On Monday, Fed Governor Lael Brainard, the last Fed official to comment before the U.S. central bank's next meeting, kept to a dovish tone on rates and urged caution about removing monetary stimulus too quickly. had this absolute rush of speakers and so many different points of view ... It certainly muddied the waters to a degree. I don't think anybody walked away with clarity of what that means for September. I don't think that is necessarily a good things for markets," said Jim Tierney, CIO of U.S. Concentrated Growth at AllianceBernstein in New York.
In the energy market, Brent crude LCOc1 was down 2.1 percent, while U.S. crude CLc1 fell 2.7 percent.
The S&P energy index .SPNY was down 2.9 percent, while the S&P financial index .SPSY was down 1.8 percent.
The Dow Jones industrial average .DJI was down 224.83 points, or 1.23 percent, to 18,100.24, the S&P 500 .SPX had lost 29.08 points, or 1.35 percent, to 2,129.96 and the Nasdaq Composite .IXIC had dropped 57.53 points, or 1.1 percent, to 5,154.36.
MSCI's all-country world stock index .MIWD00000PUS was down 1.3 percent, while European shares . FTEU3 closed down 1 percent, marking their fourth down day. trigger for the turmoil of the last few days was disappointment that the European Central Bank did not signal an extension of its bond-buying stimulus program at its meeting last Thursday. helped push up yields on government bonds in the euro zone, many of which were negative, as well as yields in Japan, the United States and elsewhere.
On Tuesday, the U.S. dollar recovered while U.S. Treasuries were steady, with the yield curve holding near its steepest levels in more than one month.
Long bonds have underperformed in the past month, in line with a steepening yield curve in Japanese government bonds, with the Bank of Japan studying options to steepen the yield curve to help prompt new lending by banks.
Thirty-year U.S. yields US30YT=RR held just below 2-1/2-month highs at 2.47 percent on Tuesday. They have jumped from 2.22 percent last Thursday. U.S. dollar index .DXY was up 0.4 percent. Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
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http://link.reuters.com/dub25t Commodities performance
http://link.reuters.com/rac73w Currencies vs dollar
http://link.reuters.com/tak27s
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