* World MSCI stock index drops for second day
* EU slashes euro zone growth outlook
* Germany's DAX leads swoon in Europe equities
* Trump says won't meet China's Xi before March 1 deadline
* Dollar climbs for 6th session, euro slips
(Updates with close of U.S. markets)
By Lewis Krauskopf
NEW YORK, Feb 7 (Reuters) - Stocks pulled back sharply around the world on Thursday on fears of a global growth slowdown spreading to Europe and worry about the chances for a resolution of U.S.-China trade tensions anytime soon, while the U.S. dollar strengthened for a sixth session against a basket of currencies.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.98 percent as it receded from two-month highs reached earlier in the week. The pan-European STOXX 600 index .STOXX lost 1.49 percent after disappointing corporate updates from Publicis PUBP.PA and other companies, while Wall Street's S&P 500 benchmark index .SPX dropped 0.9 percent. 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 DAX stock index tumbled 2.7 percent as industrial output in Europe's biggest economy unexpectedly fell in December for the fourth consecutive month. assets gained, including Japan's yen JPY= and gold XAU= . 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."
Heightened concerns about U.S.-China trade relations also rattled investors after President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal. concern that the stalemate won't be overcome by China and the U.S. is going to create negative sentiment for the markets just because trade is the single largest overhang," said Mike Loewengart, vice-president of investment strategy at E*Trade Financial in New York.
On Wall Street, the Dow Jones Industrial Average .DJI fell 220.77 points, or 0.87 percent, to 25,169.53, the S&P 500 .SPX lost 25.56 points, or 0.94 percent, to 2,706.05 and the Nasdaq Composite .IXIC dropped 86.93 points, or 1.18 percent, to 7,288.35.
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 0.14 percent to $1.1344.
The dollar index .DXY , which weighs the greenback against a basket of six currencies, rose 0.15 percent, firming for a sixth session in a row.
U.S. Treasury yields fell for a third straight session. Benchmark U.S. 10-year notes US10YT=RR last rose 13/32 in price to yield 2.659 percent, from 2.704 percent late on Wednesday.
Oil fell as the market confronted concerns that global demand growth would lag in the coming year. crude CLcv1 settled down 2.5 percent to $52.64 a barrel, while Brent LCOcv1 settled at $61.63 a barrel, down 1.7 percent.
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