Stocks slide on China worries, rising supply hits oil

By Herbert Lash

NEW YORK (Reuters) - Stock markets slid worldwide on Monday as reduced outlooks from Caterpillar and Nvidia Corp underscored investor concerns about China's economy, while oil headed for its biggest one-day drop in a month on evidence of more growth in U.S. crude supply.

Equity markets also were hammered by a plunge in Brazilian miner Vale SA that wiped out about $13.8 billion in market value after a tailing dam collapsed last week and killed at least 60 people. Vale shares dropped 16.9 percent in New York trade.

The dollar fell against a basket of currencies as traders awaited the Federal Reserve's two-day policy meeting and Sino-U.S. trade talks.

The euro reached a 10-day high against the dollar ahead of voting in Britain's Parliament on Tuesday that aims to break the Brexit deadlock.

Caterpillar, a bellwether for global industrials, fell 7.9 percent as its quarterly profit widely missed Wall Street estimates on softening Chinese demand, a strong dollar and higher manufacturing and freight costs.

Nvidia slid 12.02 percent after the chipmaker cut its fourth-quarter revenue estimate by half a billion dollars, hit by weak demand for its gaming chips in China and lower-than-expected data center sales.

"With Caterpillar blaming China, investors are expecting to see more companies do the same through the week," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

The FTSEurofirst 300 index of leading regional shares fell 0.92 percent while MSCI's all-country world equity index declined 0.81 percent.

The Dow Jones Industrial Average fell 305.38 points, or 1.23 percent, to 24,431.82. The S&P 500 lost 29.32 points, or 1.10 percent, to 2,635.44 and the Nasdaq Composite dropped 97.01 points, or 1.35 percent, to 7,067.85.

Emerging market stocks lost 0.48 percent.

Equity markets have solid underpinnings with fourth-quarter earnings looking good, a likely truce in the U.S.-China trade talks and the Fed sounding a dovish message, said Laura Kane, head of investment themes for the Americas at UBS Wealth Management.

But volatility has picked up as investors fret about an economic cycle that is long in the tooth.

"We're more optimistic. But the complication of volatility being uncomfortable and the fact we're later cycle, that's why we're seeing these larger reactions to market news than we're used to," Kane said.

U.S. energy companies last week boosted the number of rigs drilling for oil for the first time since late December.

U.S. crude production, which rose to a record 11.9 million barrels per day late last year, has undermined sentiment in the oil market, traders said.U.S. crude fell 3.37 percent to $51.88 per barrel and Brent was last at $59.86, down 2.89 percent.

In FX markets, the ICE index that tracks the dollar versus the euro, yen, sterling and three other currencies was down 0.1 percent at 95.700. It hit a near two-week low at 95.673 earlier in the session.

The euro rose 0.21 percent to $1.1436 while the Japanese yen strengthened 0.27 percent versus the greenback at 109.27 per dollar.

Benchmark 10-year U.S. Treasury notes last rose 3/32 in price to yield 2.7404 percent.

(Reporting by Herbert Lash; additional reporting by Sruthi Shankar in Bengaluru; Editing by Dan Grebler)