GLOBAL MARKETS-US stocks fall in late sell-off, oil surges

* Stocks turn negative on financials sell-off

* Oil prices above $81 on U.S. gasoline inventories

* Dollar weakens on interest rate anxiety (Recasts, updates with closing prices)

By Manuela Badawy

NEW YORK, Oct 21 (Reuters) - U.S. stocks closed weaker on Wednesday after an influential bank analyst recommended selling Wells Fargo, while the euro broke above $1.50 for the first time in 14 months on expectations U.S. interest rates will stay low.

The Dow Jones industrial average <.DJI> closed 0.92 percent lower at 9,948.83, after Rochdale Research analyst Richard Bove cut his rating on Wells Fargo's stock, saying loan losses were mounting. The KBW bank index <.BKX> dropped 2.4 percent. Shares of Wells Fargo slid 5.1 percent to $28.90.

"It just shows you how susceptible we are to bad news right now," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco. "We've got such an extended stock market that a feather of news is enough to cascade it down 100 points."

The San Francisco-based bank had reported a 60 percent jump in third quarter profits earlier in the day.

A wider-than-expected loss from Boeing also disappointed investors.

Morgan Stanley also reported better-than expected quarterly profit earlier in the day, citing strong fixed income sales and trading revenue and improved investment banking underwriting results, sending its shares up 6.9 percent. For more see [ID:nN21432907].

MSCI's world stock index <.MIWD00000PUS> fell 0.24 percent, in tandem with the U.S. market.

The FTSEurofirst 300 <.FTEU3> index of top European shares rose 0.45 percent, recouping almost all Tuesday's losses and taking it near its highest close since Oct. 3, 2008.

Oil prices rose more than 3 percent, above $81 a barrel, the highest in a year after U.S. government data showed gasoline stockpiles fell a lot more than expected last week. This supported energy stocks and emerging economies, which are set to recover at a faster speed than some developed markets.

China's voracious appetite for commodities and continued growth has helped countries such as Brazil, where heavyweight companies such as energy company Petrobras and miner Vale are tied to the trade in raw materials.

MSCI's Latin American stock index <.MILA00000PUS> rose 0.89 percent, easing from a 2.5 percent gain earlier in the day.

INTEREST RATE ANXIETY

U.S. Treasury debt prices fell, with the benchmark 10-year U.S. Treasury note down 12/32 to yield 3.38 percent.

Treasuries also tracked European bond markets lower after comments from the Bank of England triggered a fresh round of anxiety about the eventual withdrawal of monetary stimulus and even interest-rate hikes. [ID:nLL64535]

The dollar fell 0.75 percent against a basket of other major currencies <.DXY>, hitting a fresh 14-month low of 74.94 reaching its 10th loss in 15 sessions this month.

Whether the euro, the biggest component of the basket, pushes higher depends to some extent on U.S. stocks and crude oil futures.

The dollar and commodities are often inversely correlated, with gold and oil priced in dollars and seen as an alternative currency and hard asset themselves.

Sentiment towards the dollar continues to be hurt by the prospect of benchmark U.S. interest rates staying at exceptionally low levels. Low rates make the dollar less attractive to investors than higher-yielding currencies more closely correlated with economic recovery.

The British pound gained 1.25 percent against the U.S. dollar to $1.6591 , and heavy dollar selling helped push the euro to $1.5007 , up 0.45 percent.

In China, the State Council said economic recovery had been "consolidated," a shift in rhetoric some analysts say may be a first hint that officials are at least thinking about how to normalize loose monetary and fiscal polices. [ID:nPEK213103] (Additional reporting by Ellis Mnyandu; Editing by Kenneth Barry)