* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* S&P 500 futures fall further in Asia, Nikkei at 15-mth low
* Trump threatens partial US govt shutdown over wall funding
* Dollar skids on yen as investors flee to safe havens
* Oil near lowest in over a year, an added bonus to bonds
By Wayne Cole
SYDNEY, Dec 21 (Reuters) - Global stocks were sailing into Christmas on a sea of red on Friday as the threat of a U.S. government shutdown and of further hikes in U.S. borrowing costs inflamed investor unease over the economic outlook.
The S&P 500 .SPX was heading for its worst quarter since the dark days of late 2008, with a loss of 15 percent so far. The Nasdaq has shed 19.5 percent from its August peak, just shy of confirming a bear market.
Oil prices slid just over 4 percent overnight, bringing Brent's losses since its October top to 37 percent. And the dollar suffered its biggest one-day drop on the yen since November 2017 as investors stampeded to safe havens.
Michael McCarthy, chief market strategist at CMC Markets, said the downward spiral was becoming self fulfilling with selling begetting more selling.
"Negative momentum is a key factor in driving investor behaviour. Fundamental justifications are following the action," said McCarthy. "The selling will finish when it is done."
Early Friday, E-Mini futures for the S&P 500 ESc1 were off another 0.25 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS went flat.
South Korean stocks .KS11 slipped 0.3 percent and Japan's Nikkei .N225 0.5 percent.
The Nikkei had already hit a 15-month low on Thursday when the U.S. Federal Reserve largely retained plans to increase interest rates despite mounting risks to growth.
Markets were further spooked when U.S. President Donald Trump refused to sign legislation to fund the U.S. government unless he got money for a border wall, thus risking a partial federal shutdown on Saturday. brinkmanship in Washington is further heightening market uncertainty," said Westpac economist Elliot Clarke.
"Friday will be a tense day in Washington, and for financial markets, as a last-minute compromise is sought."
Adding to the air of crisis was news U.S. Defense Secretary Jim Mattis had resigned after Trump proposed withdrawing troops from Syria and sources said a military pullback from Afghanistan was on the cards. brittle mood showed on Wall Street where the Dow .DJI ended Thursday with a loss of 1.99 percent. The S&P 500 .SPX dived 1.58 percent and the Nasdaq .IXIC 1.63 percent. .N
STAMPEDE FOR THE EXITS
The sea change in sentiment has triggered a rush out of crowded trades, including massive long positions in U.S. equities and the dollar and short positions in Treasuries.
Lipper data out Thursday showed investors pulled nearly $34.6 billion out of stock funds in the latest week and were heading for the biggest month of net withdrawals on record.
There was also a sense of capitulation in currency markets as the dollar dived 1.1 percent on the yen on Thursday to hit a three-month trough at 110.80 JPY= . It was last changing hands at 111.14 having shattered several layers of chart support.
The euro had jumped to its highest in over six weeks at $1.1485 EUR= , before steadying at $1.1459. Against a basket of currencies, the dollar sagged to 96.394 .DXY after suffering its largest single-session fall in two months.
The Swedish crown SEK= was a big gainer after its central bank on Thursday raised interest rates for the first time in more than seven years. flight from risk was a boon to sovereign bonds, where U.S. 10-year yields US10YT=RR struck their lowest since early April at 2.748 percent. As recently as October, they had been at a seven-year top of 3.261 percent.
The gap between two- and 10-year yields US2US10=TWEB shrank to just 9 basis points at one stage, the kind of flattening that has heralded recessions in the past.
The rally in longer-dated paper has been fuelled by the huge slide in oil prices, which will pile downward pressure on inflation at a time when the global economy was already slowing.
Both Brent and U.S. crude futures reached their lowest in more than a year overnight amid a glut of supply. U.S. crude CLc1 eked out a 46 cent bounce in Asia on Friday to $46.33 a barrel, while Brent LCOc1 was yet to trade at $54.70. O/R
Going the other way was gold, as the precious metal benefited form the sharp reversal in the dollar to stand at $1,262.11 an ounce XAU= .
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