GLOBAL MARKETS-Stocks, euro slump as risk aversion grows

                                
   * Euro battered as refinancing crunch nears on Thursday
                                
 * U.S. 2-year note yields hit record low on risk aversion
                                
 * Gold inches higher as safe-haven buying supports gains
  (Adds close of European markets
                                
 By Herbert Lash
                                
 NEW YORK, June 29 (Reuters) - World stocks, commodities and
the euro all tumbled on Tuesday as risk aversion grew on
concerns over funding for European banks that must repay almost
half a trillion euros in emergency loans this week.
                                
 A sharp drop in U.S. consumer confidence also eroded risk
appetite, pushing up the price of government debt on both sides
of the Atlantic and helping firm other safe-haven assets, such
as gold.
                                
 Yields on the benchmark U.S. 10-year Treasury <US10YT=RR>
fell below 3 percent for the first time since April 2009, while
the euro hit an all-time low versus the Swiss franc and an
8-1/2-year trough against the yen. [ID:nN29137639]
                                
 Interbank euro funding costs rose to an eight-month high,
and the price of German Bunds hit three-week highs, buoyed by
the slide in U.S. Treasury yields. [ID:nLDE65S1N9] and
[ID:nLDE65S1KM]
                                
 "It is a return to risk aversion," said Eugen Weinberg, a
commodity analyst at Commerzbank in Frankfurt.
                                
 Fears of a potential liquidity shortfall of more than 100
billion euros in the financial system stoked the aversion to
risk as European banks were poised to repay 442 billion euros
($545.5 billion) to the European Central Bank on Thursday.
                                
 The Standard & Poor's 500 Index, a U.S. stock benchmark,
slid to within 2 points of its 2010 low, a threshold that if
broken, could trigger a further sell-off. The index was also on
course to close at its lowest level since November.
                                
 European shares hit a three-week closing low, breaking a
key technical support level. The FTSEurofirst 300 <.FTEU3>
index of top European shares ended down 3 percent at 995.82
points, its lowest close since June 9.
                                
 The Euro STOXX 50 <.STOXX50E> fell below a retracement
level from its April high and May low, signaling more losses.
                                
 MSCI's all-country world index <.MIWD00000PUS> slid nearly
3 percent, and its emerging markets index <.MSCIEF> fell 2.8
percent.
                                
 At 1 p.m. EDT (1700 GMT), the Dow Jones industrial average
<.DJI> tumbled 236.85 points, or 2.34 percent, at 9,901.67. The
Standard & Poor's 500 Index <.SPX> dropped 28.62 points, or
2.66 percent, at 1,045.95. The Nasdaq Composite Index <.IXIC>
slid 68.49 points, or 3.08 percent, at 2,152.16.
                                
 SHORT COVERING
                                
 Traders cited significant U.S. dollar short-covering
overnight, further weighing on the euro.
                                
 The euro <EUR=> was down 0.69 percent at $1.2192, while the
dollar was up against a basket of major currencies, with the
U.S. Dollar Index <.DXY> adding 0.50 percent at 86.076.
                                
 The risk premium on southern European government bonds over
benchmark German bunds widened and the cost of insuring their
debt against default rose. [ID:nLDE65S0PT]
                                
 Banks were among the heaviest decliners as they prepared to
pay back the ECB money that was borrowed a year ago at
rock-bottom rates. [ID:nLDE65S15K]
                                
 The STOXX Europe 600 banking index fell 4.2 percent, while
Barclays Plc <BARC.L>, BNP Paribas <BNPP.PA>, Societe Generale
<SOGN.PA> and Credit Agricole SA <CAGR.PA> were off between 6.3
percent and 7.9 percent.
                                
 Even though U.S. single-family home prices climbed
unexpectedly in April from the previous month, signs of a
sustained recovery have not yet emerged, according to Standard
& Poor's/Case Shiller.
                                
 Its composite index of prices in 20 U.S. metropolitan areas
rose 0.4 percent on a seasonally adjusted basis after a
downwardly revised 0.2 percent drop in March.
                                
 U.S. light sweet crude oil <CLc1> fell $2.53 to $75.72 a
barrel, while ICE Brent <LCOc1> fell $2.42 to $75.17, and
copper shed more than 4 percent on concerns about an economic
recovery. [ID:nLDE65S0JW] and [ID:nLDE65S0SX]
                                
 Benchmark 10-year notes <US10YT=RR> traded 10/32 higher in
price to yield 2.99 percent.
                                
 Gold advanced, and U.S. Treasuries rose, pushing two-year
note yields to the lowest on record, as jitters over the euro
zone debt crisis supported safe-haven demand. For details see:
[ID:nLDE65S0RF] [ID:nN29317847]
                                
 Spot gold prices <XAU=> added $6.50 to $1,243.50 an ounce.
  (Reporting by Angela Moon, Chris Reese in New York; Kirsten
Donovan, Emelia Sithole-Matarise, Atul Prakash, Harpreet Bhal,
Jan Harvey and Christopher Johnson in London; writing by
Herbert Lash; editing by Jeffrey Benkoe)