(Adds close of U.S. markets)
* S&P500 index sees biggest one-day fall since Feb.
* Tech stocks tumble on slowing demand concerns
* Long-dated Treasury yields slip as investors seek safety
* Sterling strengthens on hopes for Brexit deal
By Herbert Lash
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."
On Wall Street, the Philadelphia Semiconductor index .SOX tumbled 4.46 percent after Swiss vacuum valve maker VAT Group VACN.S said demand was softening from chip equipment makers. the tech sector's worst performers in Europe, Austrian chipmaker AMS AMS.S fell 5.9 percent and STMicroelectronics STM.PA closed down 5.8 percent.
Benchmark U.S. 10-year Treasury notes US10YT=RR 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. 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 .DJI fell 831.83 points, or 2.2 percent, to 25,598.74. The S&P 500 .SPX lost 94.66 points, or 3.29 percent, to 2,785.68 and the Nasdaq Composite .IXIC dropped 315.97 points, or 4.08 percent, to 7,422.05.
MSCI's gauge of stocks across the globe .MIWD00000PUS fell percent, its biggest single-day fall since February. The pan-European FTSEurofirst 300 index .FTEU3 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. 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 (LON:STAN) Bank in New York.
The dollar index .DXY fell 0.17 percent, with the euro EUR= up 0.25 percent to $1.1518. The Japanese yen JPY= 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 CLc1 settled down $1.79 at $73.17 per barrel and Brent LCOc1 fell $1.91 to settle at $83.09.
U.S. gold futures GCv1 settled up $1.9, or 0.16 percent, at $1,193.4.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ IMF global GDP growth
https://tmsnrt.rs/2ykjmXG CNH
https://reut.rs/2ysJRdO 10-yr US yields vs S&P 500 in 2018
https://tmsnrt.rs/2ytikZs
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>