* World MSCI stock index down for second day
* Germany's DAX leads swoon in Europe equities
* Dollar climbs, euro slips after euro zone growth forecast cut
* U.S. yields slide on global growth fears
(Updates with open of U.S. markets; changes dateline from London)
By Lewis Krauskopf
NEW YORK, Feb 7 (Reuters) - Stocks around the world pulled back sharply on Thursday as fears of a global growth slowdown spread to Europe, while the U.S. dollar strengthened for a sixth session as central banks outside the country grow more cautious.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.95 percent, receding from two-month highs reached earlier in the week, as the pan-European STOXX 600 index .STOXX lost 1.11 percent.
The European Commission sharply cut its forecasts for euro zone economic growth this year and next on expectations the bloc's largest countries will be held back by global trade tensions and domestic challenges. Germany's Horizons DAX Germany (NASDAQ:DAX) stock index tumbled 2.3 percent as industrial output in Europe's biggest economy unexpectedly fell in December for the fourth consecutive month. though we are in the midst of earnings season, the macro environment is really impacting global risk sentiment," said Katie Nixon, chief investment officer at Northern Trust (NASDAQ:NTRS) Wealth Management in Chicago.
"Fears of a more dramatic slowdown in Europe are being joined with the fears around a slowdown in China. And the broad slowdown in global trade is having a direct impact on some of these economies and some of the results."
Adding to the growth jitters, White House adviser Larry Kudlow said in a television interview that there was a sizable distance to go in U.S.-China trade talks. Wall Street, the Dow Jones Industrial Average .DJI fell 246 points, or 0.97 percent, to 25,144.3, the S&P 500 .SPX lost 29.76 points, or 1.09 percent, to 2,701.85 and the Nasdaq Composite .IXIC dropped 88.26 points, or 1.2 percent, to 7,287.02.
U.S. regional lender BB&T Corp (NYSE:BBT) BBT.N will buy rival SunTrust Banks Inc (NYSE:STI) STI.N for about $28 billion in stock, the biggest bank deal in about a decade. Shares of both banks rose. downgrade in European growth expectations filtered into currency markets, with the euro EUR= down 0.05 percent to $1.1354.
The dollar index .DXY , which weighs the greenback against a basket of six currencies, rose 0.03 percent, firming for a sixth session in a row.
The dollar's gains come despite the Federal Reserve's dovish shift on interest rates last week.
"When analyzing a currency's exchange rate, it should be relative to a peer. So far it seems none of these peers have a competitive advantage, making the dollar the less unloved currency," Hussein Sayed, strategist at forex broker FXTM said in a note.
U.S. Treasury yields fell for a third straight session. Benchmark U.S. 10-year notes US10YT=RR last rose 11/32 in price to yield 2.6644 percent, from 2.704 percent late on Wednesday.
Oil fell after data showing a rise in U.S. inventories weighed on market participants already rattled by worries over the global economy. crude CLcv1 sank 2.78 percent to $52.51 per barrel and Brent LCOcv1 was last at $61.50, down 1.9 percent on the day.
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