Global stocks, oil fall on weak outlook

By Herbert Lash

NEW YORK (Reuters) - Oil prices fell and global stocks tumbled on Tuesday as talk of a second U.S. government stimulus plan heightened persistent concerns about prospects for an economic recovery.

A breach of a key technical support of the Standard & Poor's 500 Index .SPX below the 885 level accelerated a late-day sell-off in U.S. equities, driving benchmark yields on U.S. Treasuries to six-week lows.

The Dow and S&P 500 fell to their lowest levels in 10 weeks, with both closing down just shy of 2 percent.

The yen gained as caution was the order of the day before the start of the release of U.S. corporate earnings for the second quarter, which will kick off with Alcoa (AA.N) after markets close on Wednesday.

The yen's safe-haven appeal rose on uncertainty about the global economic outlook. The price of copper and other commodities fell, while U.S. gold futures edged higher.

"We've been getting very mixed signals, with some positive data and some very poor data, so it's extremely difficult to pinpoint direction," said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank in New York.

"As a result, people are backing out of high-yield assets and into the yen and dollar. Now, the focus will turn to corporate earnings as the main driver for the market."

S&P on Tuesday said that the charge-off rate, or loans that banks do not expect to be repaid, of bank-issued U.S. credit cards rose to a record in May as unemployment hit a 26-year high.