* Oil weakens on doubt over output deal
* Miners, banks fall back on energy concerns
* Sterling still under Brexit pressure
(Adds close of European markets)
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, reversing some of their recent bounce on signs a
proposed output freeze by producers would not come to fruition.
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 were down more about 4
percent. Crude weakened 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.
"You still see this hypersensitivity to what's going on with
the price of oil and the market's reacting on a day-to-day basis
to that," said Scott Brown, chief economist at Raymond James in
St. Petersburg, Florida.
"It really shouldn't, but it gives you a sense of the
nervousness out there."
U.S. crude futures were last down 4.5 percent at $31.90 a
barrel and Brent LCOc1 lost 3.8 percent to $33.36 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 170.93 points,
or 1.03 percent, to 16,449.73, the S&P 500 .SPX lost 19.49
points, or 1 percent, to 1,926.01 and the Nasdaq Composite
.IXIC dropped 48.58 points, or 1.06 percent, to 4,522.03.
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
vulnerable, a day after falling nearly 2 percent, its biggest
one-day percentage drop in almost 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 0.03 percent at $1.1023.
Investors' shift towards safer ground on Tuesday pushed the
dollar lower against the yen, down 0.7 percent to 112.12 yen
JPY= after hitting a low of 111.75. The risk-aversion helped
lift gold 1.2 percent to $1,222.90 an ounce XAU= .
The dollar's index against a basket of six major currencies
.DXY was little changed, up 0.01 percent at 97.386.
Benchmark 10-year U.S. Treasuries reversed earlier losses
and were last up 10/32 in price to yield 1.7311 percent.
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