GLOBAL MARKETS-World stocks tumble 4 pct on economic worries

* World stocks fall more than 4 percent

* Fed statement, weak data fuel global economic worries

* Safe-haven dollar, Treasuries soar as oil, gold tumble
(Updates prices, adds comment, details, changes byline,
dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Sept 22 (Reuters) - A grim economic outlook from
the U.S. Federal Reserve and signs of slowing growth in China
and Germany drove world stocks down more than 4 percent on
Thursday, prodding investors into the safe-haven U.S. dollar
and government bonds.

The U.S. dollar climbed to a seven-month high against a
basket of major currencies as investors dumped riskier trades
in favor of the world's most liquid currency.

The sharp rally in the dollar pushed down U.S. crude oil
prices by more than 5 percent, while gold fell nearly $50 an
ounce in a broad retreat in the commodities sector.

U.S. stocks were sharply lower in early trading and
European shares fell more than 4 percent to a two-year low,
dragging an index of global equities to a one-year trough.

"Hidden behind the Greek drama over the past few weeks and
unveiled again yesterday with the (Fed) statement and action,
the unfolding global economic slowdown is back to front and
center," said Peter Boockvar, equity strategist at Miller Tabak
& Co in New York.

The Dow Jones industrial average .DJI was down 348.59
points, or 3.13 percent, at 10,776.25. The Standard & Poor's
500 Index .SPX dropped 35.55 points, or 3.05 percent, at
1,131.21. The Nasdaq Composite Index .IXIC slid 75.81 points,
or 2.99 percent, at 2,462.38.

World stocks as measured by the MSCI index .MIWD00000PUS
were down 4.4 percent. The more volatile emerging markets stock
index .MSCIEF slid 6.2 percent.

In Europe, the FTSEurofirst 300 .FTEU3 fell 4.4 percent.
Britain's FTSE 100 .FTSE lost 4.8 percent, and Japan's Nikkei
.N225 closed down 2.1 percent.

The Federal Reserve warned Wednesday of significant risks
to the already weak U.S. economy as it launched a plan, dubbed
Operation Twist, to lower long-term borrowing costs and bolster
the battered housing market.

"It seems the market doesn't believe Operation Twist is
enough to kick-start the spluttering economy," said Ben Potter,
market strategist at IG Markets. "A very downbeat outlook ...
seems to have unsettled markets even further."

Adding to the gloom about the global economy, China's
manufacturing sector contracted for a third consecutive month
in September, while business activity in Germany grew at its
weakest pace in more than two years in September and new orders
fell for a third month. [ID:nL5E7KM1AQ]

SAFETY FIRST

Benchmark 10-year notes rose a point, their yields
US10YT=RR falling to 1.76 percent from 1.87 percent late
Wednesday.

The dollar climbed to a seven-month high against major
currencies .DXY. It was last up 1.6 percent at 78.556.

"The dollar's strength and the risk aversion that we have
seen in recent weeks have picked up steam," said Tohru Sasaki,
head of Japan rates and FX research at JPMorgan Chase.

The euro fell to an eight-month low of $1.3384, its lowest
since January EUR=EBS, and was last down 0.9 percent at
$1.3443.

Spot gold XAU= last traded down at about $1,734.

U.S. crude futures CLc1 were down $4.07 at $81.80 a
barrel, while Brent futures LCOc1 were $3.64 lower at $106.74
a barrel.
(Additional reporting by Jeremy Gaunt in London; editing by
Jeffrey Benkoe)