World stocks, oil fall as Greek talks collapse

By Ryan Vlastelica

NEW YORK (Reuters) - Stock markets around the world fell on Monday as they felt the ripple effects of the Greek crisis after the collapse of 11th-hour talks between the near-bankrupt country and its creditors.

The losses were broad across risky assets such as equities, though major stock indexes were off their lows of the session.

While crude oil prices fell, the euro recovered from earlier weakness against the dollar to trade slightly higher. Gold and silver rose on the day.

Talks on Sunday between Greece and its creditors to bridge their differences broke up after less than an hour.

European Union officials said Athens had offered no new concessions to secure the funding it needs, while Athens said it would not give in to demands for more pension and wage cuts.

Greece must repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund by mid-year.

Greece has already been bailed out twice and many banks have cut their exposure to the country while euro zone authorities have put in place mechanisms to limit any knock-on effects from the crisis.

However, the prospect of default and the possibility of Athens leaving the euro weighed heavily on investor sentiment.

"The market has had a long time to prepare for (a Greek default) and has done what it can with what it sees on the horizon," said Ashwin Bulchandani, head strategist at asset manager MatlinPatterson in New York.

"But with situations like this, there is always an unknown factor. Uncertainty freaks the market out."

The all-country MSCI International ACWI Price Index fell 0.7 percent, while the pan-European FTSEurofirst 300 closed down 1.6 percent, pressured by losses in bank stocks. The Hang Seng index of top shares in Hong Kong ended 1.5 percent lower.

U.S. stocks recouped some of their losses in afternoon trading after a sharp fall on worries about Greece's debt.

The Dow Jones industrial average fell 108.24 points, or 0.6 percent, to 17,790.6, the S&P 500 lost 8.94 points, or 0.43 percent, to 2,085.17 and the Nasdaq Composite dropped 25.89 points, or 0.51 percent, to 5,025.21. The benchmark S&P earlier fell 1 percent on the day.

The CBOE Volatility index, a measure of U.S. investor anxiety, rose 9.9 percent, while a gauge of European stock market volatility popped 10.2 percent and hit its highest since January.

U.S. Treasury yields fell after New York manufacturing data disappointed and on concerns of a Greek default and possible ejection from the euro zone. The benchmark 10-year U.S. Treasury note rose 8/32 in price, pushing the yield down to 2.3541 percent.

In the currency market, the euro rose 0.1 percent against the U.S. dollar, moving to $1.1280 and recovering from a low of $1.1188. The U.S. dollar index, which measures the greenback against a basket of currencies, fell 0.13 percent. The yen moved less than 0.1 percent against the dollar.

Investors were looking ahead to a meeting of U.S. Federal Reserve policymakers this week, and especially towards their statement after the two-day meeting ends on Wednesday.

Strong U.S. data last week has reinforced expectations that the central bank is on track to raise interest rates, possibly as soon as September. Investors will focus on any changes in Fed Chair Janet Yellen's language at a post-meeting news conference.

U.S. crude futures fell 0.8 percent to $59.49 per barrel while Brent lost 2.5 percent to $62.30.

Gold rose 0.6 percent on the day while silver rose 1.3 percent. Copper sank 1.5 percent.

(Additional reporting by Tanya Agrawal; Editing by Nick Zieminski and Bernadette Baum)