GLOBAL MARKETS-Stocks, commodities slip on global recession fear

* Bonds rise as stocks decline on recession, profit fears

* Oil slips despite expected OPEC production cut on Friday

* Euro at three-year low vs yen; dollar index scales high (Recasts with U.S. markets, adds byline; changes dateline; previous LONDON)

By Herbert Lash

NEW YORK, Oct 21 (Reuters) - Renewed fears of a global recession weighed on stock and commodity markets on Tuesday, even as credit markets thawed a bit more and global authorities took further steps to bolster investor confidence.

U.S. and euro zone government debt prices rose on a number of downbeat U.S. corporate outlooks while the U.S. dollar benefited from safe-haven buying, helping it shoot to a one-and-a-half-year peak against a basket of major currencies.

Gold futures dropped as much as 3 percent as the dollar's rally and relatively calm global markets dimmed the metal's appeal as an alternative investment.

A sharp pullback in commodity prices and commodity-linked stocks on concerns that economies across the globe might be spiraling into recession sent a pall over financial markets, despite renewed efforts to loosen tight credit.

"We had a rally yesterday on a lift in commodities, so now we're seeing a pullback in commodities and that's correlated with the perceptions of whether there's global growth or not," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

Japan and France extended more help to banks, the International Monetary Fund prepared to intervene in trouble spots around the world, and the U.S. Federal Reserve devised a new plan to inject liquidity into troubled money markets.

"This latest move by the Fed is a blow to the market's psychology," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "It means that money market funds are having difficulty meeting redemptions and investors are still putting their money in their mattresses."

Interbank lending costs fell further, offering tentative signs of renewed confidence in a battered global banking system. Weeks of bailouts and rescue plans appear to have cooled the worst financial crisis since the Great Depression.

Commodity prices pointed to recession worries. Oil fell more than 4 percent to about $70 a barrel and copper slipped below a key support level after China, the largest consumer of industrial metals, saw growth slow in the third quarter.

"The deleveraging story will continue and remain in place for quite some time," said Audrey Childe-Freeman, a currency analyst at Brown Brothers Harriman in London, referring to the sale of distressed assets to cut debt or cover losses.

U.S. stocks fell more than 2 percent as companies cut their earnings outlooks and automotive stocks pulled European shares lower in another sign of falling demand.

Before 1 p.m., the Dow Jones industrial average <.DJI> was down 175.70 points, or 1.90 percent, at 9,089.73. The Standard & Poor's 500 Index <.SPX> was down 22.33 points, or 2.27 percent, at 963.07. The Nasdaq Composite Index <.IXIC> was down 47.90 points, or 2.71 percent, at 1,722.13.

Tech bellwether Texas Instruments Inc warned of slowing sales for its widely used analog chips, while chemical maker DuPont Co cut its full-year forecast on weakening demand in North American and Western European markets.

Texas Instruments slipped 8.5 percent and DuPont gave up 6.8 percent.

Freeport-McMoRan Copper & Gold Inc , the largest publicly traded copper producer, said quarterly profit fell by one-third and it would curtail planned mine expansions because of weak metals prices. Freeport shares fell 8.3 percent.

Caterpillar Inc ,a maker of excavators and bulldozers, also missed profit expectations, sparking a drop of nearly 5 percent in its stock price.

In Europe energy shares tracked weaker crude prices and automobile stocks slipped on demand worries and rising costs.

The FTSEurofirst 300 <.FTEU3> index of top European shares ended down 0.47 percent at 923.93 points.

Volkswagen fell 12.4 percent, taking the most off the FTSEurofirst index.

Oil was pressured by expectations a global recession will crush demand and limit the impact of any supply cuts this week by the Organization of Petroleum Exporting Countries.

U.S. light crude for November delivery was down $3.98 at $70.24.

London Brent crude was $3.41 down at $68.62 a barrel.

The benchmark 10-year U.S. Treasury note was up 38/32 in price to yield 3.72 percent. The 2-year U.S. Treasury note rose 7/32 in price to yield 1.59 percent.

The dollar rose against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 1.43 percent at 84.167, and against the yen the dollar was down 1.44 percent at 100.42.

The euro fell 1.84 percent at $1.3097.

Spot gold prices fell $29.20 to $765.80 an ounce.

MSCI's all-country world stock index <.MIWD00000PUS>, a broad measure of global stock market performance, was off 1.4 percent after gaining for two days in a row. (Reporting by Ellis Mnyandu, Leah Schnurr, Richard Leong, Lucia Mutikani, Frank Tang and Barani Krishnan; and Joe Brock, Jane Merriman and Joanne Frearson in London; Writing by Herbert Lash; Editing by Leslie Adler)