Global stocks slide on Brexit fears as investors seek safe havens

By Saqib Iqbal Ahmed

NEW YORK (Reuters) - Investors swapped equities for less risky assets such as U.S. Treasury bonds and the Japanese yen on Friday on fears about the potential impact of Britain's referendum on whether it should leave the European Union, which takes place in less than two weeks.

An index of world equity markets was on pace for its worst session in more than 4 months after having snapped a five-day winning streak on Thursday, while oil prices slid and were off 2016 highs hit this week due to a stronger dollar.

U.S. Treasury yields, which move in the opposite direction to prices, fell to more than three-month lows as European sovereign debt yields plunged on continuing concerns about global growth and a potential British exit from the EU.

Britain will hold a referendum on its European Union membership on June 23. Though bookmakers' odds point towards a British vote to stay in the EU, polls suggest a neck-to-neck race.

Ten-year yields in Germany, Japan and Britain all struck record lows.

"There is some flight to safety because of concerns about 'Brexit,'" said Lou Brien, a market strategist at DRW Trading in Chicago.

Investors ditched stocks in favour of assets considered safer during times of economic uncertainty, such as bonds, gold, and the yen.

Wall Street followed the lead of Asian and European stocks to fall for a second straight day.

"There still remains quite a bit of uncertainty out there ... and returns will be fairly muted until those question marks are resolved," said Paul Springmeyer, investment management director at U.S. Bank Wealth Managing in Minneapolis.

The Dow Jones industrial average fell 147.48 points, or 0.82 percent, to 17,837.71, the S&P 500 lost 22.5 points, or 1.06 percent, to 2,092.98 and the Nasdaq Composite dropped 69.59 points, or 1.4 percent, to 4,889.03.

The MSCI world equity index of shares in 45 nations was down 1.65 percent.

Europe's broad FTSEurofirst 300 index fell to its lowest in four weeks. The index closed down 2.34 percent at 1,308.83, as political worries put pressure on cyclical stocks. [nL8N19246S]

In the currency market, the yen and Swiss franc rose as oil prices slid and bank shares led global equity markets lower, stoking a fresh wave of bids for low-risk assets.

The U.S. dollar index , which measures the dollar against a basket of currencies, added to earlier gains to touch a one-week high after a University of Michigan survey showed U.S. consumer sentiment eroded less than forecast in early June. The index was up 0.66 percent at 94.577.

Gold rebounded to a fresh three-week high, as investor risk aversion lifted appetite for the metal. Spot gold was up 0.55 percent to $1,275.32 an ounce.

Benchmark 10-year notes were up 14/32 in price to yield 1.6335 percent.

Oil prices lost more ground after data from Baker Hughes showed U.S. energy firms added rigs drilling for oil for a second week in a row for the first time since August.

"This looks like the beginning of a trend that will translate to the slowing down of U.S. crude production declines," said Tariq Zahir, who trades WTI futures spreads for Tyche Capital Advisors in New York.

Brent crude settled down $1.41, or 2.71 percent, at $50.54 a barrel, while U.S. crude settled down $1.49, or 2.95 percent, at $49.07.

(Additional reporting by Barani Krishnan and Karen Brettell in New York and Yashaswini Swamynathan in Bengaluru; Editing by Bernadette Baum and Chizu Nomiyama)