(Adds U.S. markets' closing levels; adds new quotes)
* Nasdaq flirts with correction territory before paring losses
* Cboe Volatility index hits highest since Feb. 12
* Treasuries benefit in safe-haven scramble
* Oil prices fall, gold gains
By Caroline Valetkevitch and Herbert Lash
NEW YORK, Oct 11 (Reuters) - Wall Street extended its slide into a sixth session and a global equity index fell to a 1-year low on Thursday as investors feared an escalating U.S. trade war with China and risks from a recent climb in interest rates.
The Nasdaq flirted with correction territory, sliding as much as 10.3 percent from its Aug. 29 closing record high, before paring losses to end off those levels and avoiding confirming a correction.
MSCI's gauge of stock performance in 47 countries .MIWD00000PUS dropped 2.2 percent, falling below its February lows to trade at its lowest since October 2017.
Gold, typically seen as a safe-haven asset during times of extreme volatility, rose as sliding global stock markets prompted risk-wary investors to buy the metal, and a drop in U.S. Treasury bond yields helped push the dollar lower.
In equities, Wall Street slid as risk-appetite showed no signs of picking up and volatility spiked. The Cboe Volatility index .VIX ended the day up at 24.98, its highest close since Feb. 12, a day after the S&P 500 dropped more than 3 percent in its biggest daily decline since Feb. 8.
"When you have a shock day like yesterday, people are caught off guard, and there are a lot of adjustments going on below the surface. There tends to be a lot of volatility the day after a shock day, and over the next several days or weeks," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.
The selloff came as investors prepared for the start of U.S. quarterly earnings, with JPMorgan Chase (NYSE:JPM) JPM.N , Wells Fargo (NYSE:WFC) WFC.N and Citigroup (NYSE:C) C.N due to report Friday.
The Dow Jones Industrial Average .DJI fell 545.91 points, or 2.13 percent, to 25,052.83, the S&P 500 .SPX lost 57.31 points, or 2.06 percent, to 2,728.37 and the Nasdaq Composite .IXIC dropped 92.99 points, or 1.25 percent, to 7,329.06.
The pan-European FTSEurofirst 300 index .FTEU3 of leading regional shares lost 2 percent.
U.S. Treasury yields fell to one-week lows as stocks sold off. A weaker-than-expected rise in U.S. inflation for September also added to Treasuries bullish tone. late afternoon trading, U.S. 10-year note yields were at 3.146 percent US10YT=RR , down from 3.225 percent late on Wednesday. Earlier in the global session, 10-year yields hit a one-week low of 3.124 percent.
U.S. consumer prices rose less than analysts had forecast in September, reducing expectations the pace of inflation is accelerating despite a tightening labor market. the lower reading will quell expectations the Federal Reserve will hike interest rates again in December remains to be seen, said Yousef Abbasi, global market strategist at INTL FCStone in New York.
"The thing people are trying to hang their hat on is a cooler CPI read. That potentially gets us to rally," Abbasi said.
The dollar fell to a near two-week low against a basket of currencies. dollar index .DXY fell 0.52 percent, with the euro EUR= up 0.63 percent to $1.1591.
Oil prices slumped to two-week lows as global stock markets fell, with investor sentiment made more bearish by an industry report showing U.S. crude inventories rising more than expected. crude LCOc1 futures fell $2.83 to settle at $80.26 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $2.20 to settle at $70.97 a barrel.
Spot gold XAU= rose 2.6 percent to $1,225.26. Submerging markets
https://reut.rs/2yvgDeo GRAPHIC-Global assets in 2018
http://tmsnrt.rs/2jvdmXl GRAPHIC-World FX rates in 2018
http://tmsnrt.rs/2egbfVh GRAPHIC-Emerging markets in 2018
http://tmsnrt.rs/2ihRugV GRAPHIC-MSCI All Country World Index Market Cap
http://tmsnrt.rs/2EmTD6j
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