GLOBAL MARKETS-Stocks, euro fall on European banking fears

                                
 * Major U.S. stock indexes open down
                                
 * Euro falls broadly on Europe's banking concerns
                                
 * Government bonds firmer; oil price falls
 (Updates with U.S. markets' open)  
                                
 By Walter Brandimarte and Natsuko Waki
                                
 NEW YORK/LONDON, Sept 7 (Reuters) - World stocks pulled
back from a one-month high on Tuesday while the euro tumbled on
renewed concerns about the European banking sector and signs of
slowing growth in the euro zone.
                                
 Oil prices fell more than 2 percent as the end of the U.S.
driving season added to the economic concerns.
                                
 U.S. Treasury prices rebounded after three session of
losses as investors sought safety. Many also had second
thoughts about the positive market impact of U.S. payrolls data
on Friday.
                                
 Souring investor sentiment was data showing German
manufacturing orders unexpectedly fell in July at their
steepest rate in more than a year. For details, see
[ID:nLDE68615K].
                                
 Investors were also rattled by a Wall Street Journal report
that said "stress tests" published more than a month ago
underestimated some lenders' holdings of potentially risky
government debt.
                                
 That helped rekindle concerns about the vulnerability of
the sector after Germany's banking association said Monday the
country's 10 biggest banks may need 105 billion euros of
additional capital.
                                
 "The (report) is obviously undermining banks and dragging
everything down with it," said David Morrison, market
strategist at GFT Global in London.
                                
 "Last week was an incredible start to September. There were
strong moves up on the back of economic numbers out of the
States in particular, but ... I think there is a growing
feeling that as that data is being dissected, it really did not
justify the move up that we saw in equities."
                                
 The MSCI All-Country World equity index <.MIWD00000PUS>
fell 1 percent, one day after closing at its highest level in
nearly one month.
                                
 Major U.S. stock indexes opened lower as Wall Street
investors returned from a long Labor Day holiday weekend.
                                
 The Dow Jones industrial average <.DJI> dropped 83.17
points, or 0.8 percent, to 10,364.76, while the Standard &
Poor's 500 Index <.SPX> lost 10.60 points, or 0.96 percent, to
1,093.91. The Nasdaq Composite Index <.IXIC> was down 16.75
points, or 0.75 percent, at 2,217.00.
                                
 The FTSEurofirst 300 index <.FTEU3> of top European shares
dropped 0.87 percent, pressured by banking shares such as
Societe Generale <SOGN.PA>, down 3.7 percent.
                                
 Mining shares were also among the top decliners after
Australian Prime Minister Julia Gillard secured a second term
in office, vowing to press ahead with a new mining tax and work
towards a scheme that would force major polluters to pay for
their carbon emissions.
                                
 Rio Tinto <RIO.L> lost 2.2 percent, Xstrata <XTA.L> shed
1.9 percent and BHP Billiton <BLT.L> dropped 1.4 percent.
                                
 U.S. crude oil prices <CLc1> fell $1.53, or 2.05 percent,
to $73.07 per barrel, as U.S. markets reopened. The holiday
weekend traditionally marks the end of the U.S. summer driving
season.
                                
 EURO TUMBLES ON RISK AVERSION
                                
 Banking fears knocked down the euro, which weakened 1
percent against the dollar to $1.2750.
                                
 The safe-haven yen rallied, reaching a 15-year high against
the U.S. dollar, as investors' aversion to risk grew.
                                
 The dollar was down 0.69 percent against the Japanese
currency <JPY=>, at 83.60. Against major currencies, however,
the greenback was up 0.67 percent, according to the U.S. Dollar
index <.DXY>.
                                
 U.S. Treasury prices also benefited from a flight to
quality.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
20/32 in price, with the yield at 2.6411 percent. The 30-year
bond <US30YT=RR> was up 52/32, with the yield at 3.7039
percent.
                                
 Treasuries prices had been pressured by
stronger-than-expected U.S. economic data last week, including
Friday's jobs numbers.
                                
 "People have come back to work today feeling they were a
little over exuberant in the reaction to Friday's payrolls
number. It was not as a bad as expected but certainly not a
harbinger of gangbusters economic growth going forward," said
Thomas Simons, money market economist at Jefferies & Co in New
York.
                                
 Safe-haven demand also drove gold prices <XAU=> 0.6 percent
higher, to $1,257.00 an ounce.
 (Additional reporting by Tricia Wright, John Parry and Nick
Olivari; Editing by Kenneth Barry)