* U.S. shares erase most losses to end slightly lower
* Index of top European shares hits lowest since Sept '13
* U.S. 10-yr Treasury yields touch 1-yr lows
* U.S. crude price hits nearly three-week low
(Updates to close of U.S. markets)
By Sam Forgione
NEW YORK, Feb 9 (Reuters) - U.S. stocks recovered from early
losses to end slightly lower on Tuesday while European shares
plunged for a second straight day on fears of slowing global
growth, with particular concern over the health of the banking
sector.
The benchmark U.S. S&P 500 .SPX erased most losses after
falling as much as 1 percent, with gains in health care and
materials shares offsetting declines in energy stocks. Shares of
U.S. banks stumbled before paring losses, with the S&P financial
index .SPSY ending just 0.16 percent lower.
The S&P energy index .SPNY closed down 2.47 percent and
stood out as the day's weakest sector after Brent crude settled
7.8 percent lower on the day. The volatile session came after
all three major U.S. indexes lost more than 1 percent on Monday.
The European banking index .SX7P ended 4 percent lower
after sinking 5.6 percent on Monday on fears of worsening bank
profitability and capital strength from sustained low interest
rates.
"There may be some hope there that (Federal Reserve Chair
Janet Yellen) is going to say something to buoy the markets,"
said Peter Jankovskis, co-chief investment officer at OakBrook
Investments LLC in Lisle, Illinois.
Yellen will address Congress on Wednesday.
MSCI's all-country world equity index .MIWD00000PUS , which
tracks shares in 45 nations, was last down 2.38 points or 0.66
percent, at 358.43.
The Dow Jones industrial average .DJI ended down 12.67
points, or 0.08 percent, at 16,014.38. The S&P 500 .SPX closed
down 1.23 points, or 0.07 percent, at 1,852.21. The Nasdaq
Composite .IXIC ended down 14.99 points, or 0.35 percent, at
4,268.76.
The FTSEurofirst 300 index .FTEU3 ended down 1.6 percent
at 1,219.82. The index hit its lowest level since September 2013
earlier in the day.
Benchmark Brent crude prices fell to their lowest in two
weeks and U.S. crude prices dropped below $28 a barrel to their
lowest in just under three weeks. Forecasts for more growth in
U.S. crude stockpiles and weak demand forecasts contributed to
the plunge.
Brent crude LCOc1 settled down $2.56, or 7.8 percent, at
$30.32 a barrel. U.S. crude CLc1 settled down $1.75, or 5.9
percent, at $27.94 a barrel.
Yields on benchmark 10-year Treasury notes US10YT=RR ,
sought for their relative safety, extended Monday's declines to
hit 1.682 percent, the lowest in a year.
"The mood in the market is very much 'sell today, ask
questions later' which is a boost for Treasuries and that flight
to safety is led by fear," said Gennadiy Goldberg, interest rate
strategist at TD Securities in New York.
Spot gold XAU= , another safe-haven asset, rose in price to
just below the 7 1/2-month high struck the previous
day.
The U.S. dollar extended Monday's drop against the
safe-haven Japanese yen, hitting its lowest against the yen
since November 2014 of 114.205 yen. The Mexican peso MXN= hit
an all-time low against the dollar.
U.S. gold for April delivery GCJ6 settled up 70 cents at
$1,198.60 an ounce.