(Refiles with revised headline to show dollar flat)
*Fed, financial overhaul bill weigh on US equities
*Credit default swaps on Greece hit record high
*Treasuries see demand on flight to quality bid (Recasts with U.S. markets' open; updates with new dateline and byline)
By Jennifer Ablan
NEW YORK, June 24 (Reuters) - World stock markets and high-yielding currencies dropped on Thursday as investors retreated from riskier assets, worried about tepid global growth and renewed fears in Greek debt markets.
U.S. Treasuries and gold prices rose as investors sought safe havens.
The Federal Reserve offered a subdued assessment of the U.S. economy on Wednesday and affirmed that short-term interest rates would remain near zero for "an extended period," which pressured U.S. equities for a second consecutive day on Thursday.
Investors also braced for legislators to wrap up negotiations on the financial overhaul bill. The Dow Jones Industrial Average <
> was down 111.44 points, or 1.08 percent, at 10,187.00, with financials among the worst performers.Adding to the worry list, concerns over Greece were weighing in the euro zone, as the cost of protecting its government debt against default hit a record high.
Five-year credit default swaps, or CDS, on Greek government debt climbed to a record 1,085 basis points from 934.2 basis points at the New York close on Wednesday. It now costs 1.085 million euros to insure an exposure of 10 million euros of Greek government bonds, up from 934,200 euros.
Tom Sowanick, chief investment officer at Omnivest Group in Princeton, New Jersey, said, "You're seeing risk trades being taken off, given all that's up in the air right now."
Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio, added: "There's still uncertainty in the financial reform bill. Until that's resolved and we have a more clear-cut idea of what's going to happen, that uncertainty will probably lead to continued relative weakness."
In Europe, the FTSEurofirst 300 index <
> of top shares fell 1.83 percent, near its session low. Financial stocks ranked among the top decliners, with Barclays <BARC.L>, BNP Paribas <BNPP.PA>, Credit Agricole <CAGR.PA> and Societe Generale <SOGN.PA> down between 3.50 percent 4.50 percent.World stocks measured by MSCI All-Country World Index <.MIWO00000PUS> were down for a third consecutive day, off roughly 1 percent on Thursday.
The index has fallen 5.9 percent this year, and carried a one-year forward P/E of 11.9 versus a five-year average of 13.3, according to DataStream.
FLIGHT TO FAVORITE HAVENS
U.S. Treasury debt prices rose. The benchmark 10-year U.S. Treasury note <US10YT=RR> was up 9/32, with the yield at 3.09 percent, while the 2-year U.S. Treasury note <US2YT=RR> was up 1/32, with the yield at 0.66 percent. The 30-year U.S. Treasury bond <US30YT=RR> was up 8/32, with the yield at 4.0504 percent.
In currencies, the dollar was flat against a basket of major trading-partner currencies, with the U.S. Dollar Index <.DXY> at 85.741 -- unchanged from Wednesday's close.
The euro <EUR=> was up 0.02 percent at $1.2315 from a previous session close of $1.2313. Against the Japanese yen, the dollar <JPY=> was down 0.57 percent at 89.32 from a previous session close of 89.830.
In energy and commodities prices, U.S. light sweet crude oil <CLc1> fell $1, or 1.31 percent, to $75.35 per barrel, and spot gold prices <XAU=> rose $6.10, or 0.49 percent, to $1242.30. The Reuters/Jefferies CRB Index <.CRB> was up 0.79 points, or 0.30 percent, at 260.51.
"As the U.S. fiscal stimulus starts to wane, it brings back the deflationary argument. Together with weak U.S. data, there are reasons to be pessimistic and that cannot be a positive environment for risk," said Gavin Friend, currency strategist at National Australia Bank. (Additional reporting by Leah Schnurr in New York and Domini Lau, Simon Falush, Neal Armstrong, Kirsten Donovan and George Matlock; Editing by Jan Paschal)