Stocks suffer worst loss in 8 months with the Dow plunging more than 800 points

NEW YORK, Oct 10 (Reuters) - Stocks on major world markets slid to a three-month low on Wednesday, with the benchmark S&P500 stock index falling more than 3.0 percent, its biggest one-day fall since February.

Technology shares tumbled on fears of slowing demand, while bond yields ended lower after seeing multi-year highs earlier this week.

Major equity indexes in Europe fell more than 1.0 percent, also pulled down by technology shares, and gold prices inched up as some investors sought refuge in the metal.

"The S&P 500 is looking very weak and negative and that is putting fear into investors," said Michael Matousek, head trader at U.S. Global Investors. "With the markets going down people are increasing their allocation towards gold."

19 PHOTOS
Scenes from Wall Street as markets plummet - Oct. 10-11
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Scenes from Wall Street as markets plummet - Oct. 10-11
Traders work on the floor of the New York Stock Exchange (NYSE) in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid
A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid
A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid
A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid
A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid
Trader Thomas Ferrigno works on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. U.S. stocks are mostly lower in unsteady trading one day after their biggest drop since February. (AP Photo/Richard Drew)
Trader Jonathan Corpina, left, and specialist Michael Pistillo work on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)
Specialist Anthony Rinaldi works on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)
Trader Michael Capolino works on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)
Trader Peter Mazza, left, works with trader Daniel Trimble on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)
FILE- This Wednesday, Oct. 10, 2018, file photo shows a screen above the floor of the New York Stock Exchange shows the closing number of the Dow Jones industrial average. The last time the stock market was falling this much, this fast, earnings season came to the rescue. Earlier this year, a parade of companies lined up to report profits that were even fatter than Wall Street had forecast, which helped turn momentum and get stocks back on the upswing. (AP Photo/Richard Drew)
Trader Peter Tuchman works on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)
Specialists Jay Woods, right, and Thomas McArdle work on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Oct. 11, 2018. U.S. stocks fell for a sixth day, extending the longest losing streak of Donald Trump's presidency, as energy shares plunged and a rally in tech failed to lift the broader market. Photographer: Michael Nagle/Bloomberg via Getty Images
A monitor displays Prudential Financial Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Oct. 11, 2018. U.S. stocks fell for a sixth day, extending the longest losing streak of Donald Trump's presidency, as energy shares plunged and a rally in tech failed to lift the broader market. Photographer: Michael Nagle/Bloomberg via Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Oct. 11, 2018. U.S. stocks fell for a sixth day, extending the longest losing streak of Donald Trump's presidency, as energy shares plunged and a rally in tech failed to lift the broader market. Photographer: Michael Nagle/Bloomberg via Getty Images
A monitor displays stock market information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Oct. 11, 2018. U.S. stocks fell for a sixth day, extending the longest losing streak of Donald Trump's presidency, as energy shares plunged and a rally in tech failed to lift the broader market. Photographer: Michael Nagle/Bloomberg via Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Oct. 11, 2018. U.S. stocks fell for a sixth day, extending the longest losing streak of Donald Trump's presidency, as energy shares plunged and a rally in tech failed to lift the broader market. Photographer: Michael Nagle/Bloomberg via Getty Images
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On Wall Street, the Philadelphia Semiconductor index tumbled 4.46 percent after Swiss vacuum valve maker VAT Group said demand was softening from chip equipment makers.

Among the tech sector's worst performers in Europe, Austrian chipmaker AMS fell 5.9 percent and STMicroelectronics closed down 5.8 percent.

Benchmark U.S. 10-year Treasury notes rose late in the day, pushing yields down to 3.1931 percent. Yields on 3-year notes have recently traded just above 3.0 percent, providing long-absent competition for investment returns with equities.

The rise in U.S. Treasury yields has been bolstered by good U.S. economic data that has reinforced expectations of multiple rate hikes over the next 12 months by the Federal Reserve.

Stocks and bonds traditionally have been in a tug of war for capital, but for the past 10 years bonds have had one arm tied behind their back, said Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors in Chicago.

"Short-term bonds are getting to be a compelling place to hang out," he said. "This orphan status that equity markets have enjoyed for the last 10 years is disappearing and finally getting some competition from the bond market."

The Dow Jones Industrial Average fell 831.83 points, or 2.2 percent, to 25,598.74. The S&P 500 lost 94.66 points, or 3.29 percent, to 2,785.68 and the Nasdaq Composite dropped 315.97 points, or 4.08 percent, to 7,422.05.

MSCI's gauge of stocks across the globe fell percent, its biggest single-day fall since February. The pan-European FTSEurofirst 300 index of leading regional shares closed down 1.57 percent.

The euro and sterling rose, underpinned by optimism for a Brexit deal, while the U.S. dollar lost ground against a basket of currencies even as U.S. yields hovered near multiyear peaks.

European Union Brexit negotiator Michel Barnier signaled progress on a deal with the UK over its withdrawal from the bloc.

"There is more optimism that they will find some agreement between Britain and the European Union before Brexit," said Steve Englander, global head of G10 FX research at Standard Chartered Bank in New York.

The dollar index fell 0.17 percent, with the euro up 0.25 percent to $1.1518. The Japanese yen strengthened 0.53 percent versus the greenback at 112.36.

Oil prices fell more than 2 percent as U.S. stocks plunged, even though energy traders worried about shrinking supply from Iran due to U.S. sanctions and kept an eye on Hurricane Michael, which closed nearly 40 percent of U.S. Gulf of Mexico output.

U.S. crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09.

U.S. gold futures settled up $1.9, or 0.16 percent, at $1,193.4.

(Reporting by Herbert Lash in New York; Editing by Clive McKeef)

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Markets

DJIA 23,675.64 82.66 0.35%
NASDAQ 6,783.91 30.18 0.45%
NIKKEI 225 20,881.34 -234.11 -1.11%
HANG SENG 25,814.25 0.00 0.00%
DAX 10,740.89 -31.31 -0.29%
USD (per EUR) 1.14 0.00 0.04%
JPY (per USD) 112.48 -0.04 -0.04%
GBP (per USD) 1.27 0.00 0.06%
USD (per CHF) 0.99 0.00 0.00%