* Dow, S&P 500 post biggest daily percent drops since Aug 2011
* 10-year Treasury yields recede from four-year highs
* Oil prices fall (Updates with closing U.S. markets' activity)
By Caroline Valetkevitch
NEW YORK, Feb 5 (Reuters) - U.S. stocks dropped in a rapid selloff on Monday, with the Dow falling nearly 1,600 points at its low in its biggest intraday point drop in history, while U.S. Treasury yields receded from four-year highs.
Stocks' fall added to last week's pullback from record highs in the indices. During the session, the Dow briefly fell more than 10 percent from its Jan. 26 record, with the index down as much as 6.3 percent at one point.
Wall Street indexes closed off the lows of the day but the Dow and S&P 500 both fell more than 4.0 percent, posting their biggest daily percentage drops since August 2011 and erasing their gains for the year. The Dow is now down 8.5 percent from its record and the S&P 500 is down 7.8 percent since then.
"It looks to me like a typical type of scenario when you see a single stock flash crash where you'll see bids just disappear, stop orders get kicked," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "The overall market could have taken a cue from some of the bigger names."
The CBoe Volatility index .VIX closed at its highest since August 2015.
Selling hit all S&P sector, though the S&P financial index .SPSY , down 5.0 percent, was the biggest daily percentage decliner, followed by healthcare .SPSY , down 4.6 percent. Oil prices settled more than 1.0 percent lower, pressured by rising U.S. output and other factors. Dow Jones Industrial Average .DJI fell 1,175.21 points, or 4.6 percent, to 24,345.75, the S&P 500 .SPX lost 113.19 points, or 4.10 percent, to 2,648.94 and the Nasdaq Composite .IXIC dropped 273.42 points, or 3.78 percent, to 6,967.53. pan-European FTSEurofirst 300 index .FTEU3 lost 1.51 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 2.96 percent. Treasury yields fell from four-year highs after the selloff in equity markets sparked demand for the low risk debt.
Benchmark U.S. 10-year note yields US10YT=RR surged to 2.885 percent overnight, the highest since January 2014, following data Friday that showed hourly wages rose in January.
The 10-year notes were last up rose 38/32 in price to yield 2.7093 percent, down from 2.852 percent late on Friday. that U.S. inflation is edging up have raised some traders' expectations that the Federal Reserve may hike interest rates four times this year. Fed officials have indicated that three rate hikes are likely.
The U.S. dollar rose against a basket of currencies as the U.S. bond market selloff levelled off. dollar index .DXY rose 0.45 percent, with the euro last EUR= down 0.61 percent to $1.2384.
In commodities, U.S. crude CLc1 fell 1.99 percent to $64.15 a barrel, while Brent LCOc1 fell 1.4 percent to $67.62.
Spot gold XAU= steadied at $1,334.40 an ounce.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates in 2017
http://tmsnrt.rs/2egbfVh Global assets in 2018
http://tmsnrt.rs/2jvdmXl Emerging markets in 2018
http://tmsnrt.rs/2ihRugV
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>