Equities selloff steepens, dollar slips as growth woes eyed

(Reuters) - Wall Street stocks slumped 2 percent on Thursday as anxieties about global economic growth smothered a short-lived rally in equity markets around the world that was sparked by speculation the Federal Reserve would not rush interest rate rises.

The dollar gave up some gains from a remarkable three-month run-up and U.S. benchmark bond yields touched one-year lows as investors shrugged off encouraging U.S. jobless data.

"You just look at the global picture, the concerns in Europe, Japan and emerging markets. They're all slowing, and people are leery of equity markets," said Ken Wills, senior corporate dealer at U.S. Forex in Toronto. "So, there's an awful lot of flows piling into the U.S. Treasury market."  Oil prices, deeply affected by the dollar's value, tumbled to a two-year low.

Energy stocks were big losers on Wall Street, where leadingindices were off sharply. The MSCI index of world stocks .MIWD00000PUS was off one percent at 406.89.

The Dow Jones industrial average .DJI fell 333.62 points, or 1.96 percent, to 16,660.6, theS&P 500 .SPX lost 40.53 points, or 2.06 percent, to 1,928.36 and the Nasdaq Composite.IXIC dropped 90.26 points, or 2.02 percent, to 4,378.34.

The S&P Energy Index .SPNY was down 3.6 percent on Thursday, a day after investors gave the U.S. stock market its best day of the year as Fed meeting minutes suggested the central bank would not be in a hurry to raise interest rates.

European shares hit a fresh two-month low as German exports fell 5.8 percent in August, the worst decline since January 2009. The data from Europe's biggest economy fed anxieties about recession in the euro zone.   Read More