* Dollar climbs to 16-month peak; pound falls on Brexit fears
* U.S. stock indexes sink; Apple, tech sector hit on weak views
* Global stocks gauge on track for 3rd straight drop
* Oil rises as Saudi Arabia seeks to tackle oversupply (Updates with opening of U.S. markets, changes dateline from London)
By Lewis Krauskopf
NEW YORK, Nov 12 (Reuters) - The U.S. dollar surged on Monday to its highest point in 16 months against a basket of currencies and world stocks fell broadly amid concern about political risks in Europe, while a drop in Apple shares added pressure to U.S. equities and tech shares.
Major U.S. stock indexes dropped more than 1 percent in initial trading, weighed down by a 4.6 percent slump for index heavyweight Apple AAPL.O , after an iPhone part supplier cut its outlook. Europe, fears about a no-deal Brexit and a growing rift over Italy's budget put pressure on the euro and the pound. The dollar also gained strength as investors built bets on a U.S. Federal Reserve interest rate increase next month.
"Rising global uncertainty and a widening U.S. yield differential with other economies provide support, but an elevated valuation may constrain further gains," Richard Turnill, global chief investment strategist with BlackRock, wrote in a research note.
The dollar index .DXY rose 0.57 percent, with the euro EUR= down 0.74 percent to $1.125. stocks, the Dow Jones Industrial Average .DJI fell 333.07 points, or 1.28 percent, to 25,656.23, the S&P 500 .SPX lost 34.97 points, or 1.26 percent, to 2,746.04 and the Nasdaq Composite .IXIC dropped 172.45 points, or 2.33 percent, to 7,234.45.
Apple shares fell as the main supplier for its Face ID technology, Lumentum Holdings Inc LITE.O , slashed revenue and profit forecasts, citing reduced orders from a major customer. Lumentum shares tumbled 31.3 percent and shares of other Apple suppliers also dropped. S&P 500 technology sector .SPLRCT , a main driver of the long U.S. bull run in stocks, tumbled 3.0 percent.
Tech stocks .SX8P were also weak in Europe as the pan-European STOXX 600 index .STOXX lost 0.84 percent.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed 1.19 percent, on pace for its third straight session of declines.
Oil prices rose after Saudi Arabia said OPEC and its partners believed demand was softening enough to warrant an output cut of 1 million barrels per day next year. crude CLcv1 rose 1.08 percent to $60.84 per barrel and Brent LCOcv1 was last at $70.95, up 1.1 percent on the day.
"Oil seems to be causing some jitters right now because they have been volatile," said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin.
"It should help energy stocks, yes, but whether or not it helps the overall market, that correlation is not clear a whole lot of times."
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