Global stocks tumble

LONDON (Reuters) - World stocks fell on Tuesday, erasing more than half of last week's gains, while oil hit a 3-1/2 year low and the yen and government bonds surged as concerns intensified about a deep global recession.

Confirmation that the United States had entered recession in December 2007 and a warning from the Federal Reserve chief that the economy remained under considerable stress triggered a sell-off on Wall Street on Monday, with the S&P 500 index fell 1.5 percent, edging closer to the 5-1/2 year low hit on November 21.

Emerging stocks fell 3.2 percent.

U.S. crude oil fell 2.8 percent to $47.88 a barrel, after hitting the low of $47.36 earlier.

The benchmark 10-year U.S. Treasury yield stood at 2.7155 percent, after falling to about 2.65 percent on Monday -- its lowest in 50 years.

Prices rose after Fed chairman Ben Bernanke signaled the central bank could buy government and agency bonds in order to influence yields and stimulate demand.

The National Bureau of Economic Research -- the arbiter of U.S. business cycles -- said the world's biggest economy fell into recession last December.

"If this recession lasts no longer than the longest previous downturn (16 months), the end to the slump would occur before May 2009," Nomura said in a note to clients.

"Of course, there's nothing sacrosanct about any of the metrics of previous slumps and the sharp deterioration of economic activity since September suggests this recession could surpass others in both depth and duration."

Interest rate futures are pricing in a chance that the Fed to cut interest rates to at least 0.5 percent later this month.

In Europe, the December bund futures rose 60 ticks.

The yen hit a five-week high of 92.64 per dollar as investors rushed to the low-yielding currency.

The dollar rose 0.2 percent against a basket of major currencies.

(Additional reporting by Sitaraman Shankar; Editing by Victoria Main)