GLOBAL MARKETS-Stocks, oil fall as US consumers disappoint

* Unexpected drop in US consumer sentiment raises concerns

* Stocks, oil slip; Treasuries, yen firm on safe-haven bid

* Muted U.S. inflation reinforces bets on low Fed rates (Updates with U.S. markets, changes byline, dateline, previous LONDON)

By Walter Brandimarte

NEW YORK, Aug 14 (Reuters) - Global stocks slid on Friday after U.S. consumer sentiment unexpectedly worsened in August, rekindling appetite for safe-haven assets such as U.S. Treasuries and the Japanese yen.

Oil prices also fell as much as $3 a barrel as the Reuters/University of Michigan Surveys of Consumers showed a growing number of Americans were worried about their finances, even though they expected the broader economy to improve.

The poor data eclipsed reports that showed U.S. industrial output gained for the first time in nine months and that inflation was muted in July. For details see [ID:nN14304812].

"Clearly bad news this morning, so the market is going to go down," said Stephen Massocca, managing director with Wedbush Morgan in San Francisco.

"People have significant doubt about how enduring any recovery is going to be without the consumer," he added.

The benchmark MSCI world equity index <.MIWD00000PUS> fell 1 percent after gaining nearly 2 percent the past two sessions. The index has gained more than 45 percent since its March low.

The Dow Jones industrial average <.DJI> lost nearly 1.4 percent to 9,268.35, as the preliminary reading of the index of U.S. consumer confidence for August fell to 63.2 from 66.0 in July, well below market expectations for a reading of 68.5.

The Standard & Poor's 500 Index <.SPX> declined over 1.4 percent to 997.85, while the Nasdaq Composite Index <.IXIC> was down almost 1.8 percent at 1,973.80.

The pan-European FTSEurofirst 300 <.FTEU3> index slid 0.8 percent to 940.94, ending the week about 1 percent lower after four straight weeks of gains.

Emerging-market stocks posted smaller losses, with the benchmark MSCI index for the asset class <.MSCIEF> down 0.6 percent.

News that U.S. industrial output rose 0.5 percent in July, above expectations for 0.3 percent advance and following a 0.4 percent contraction in June, curbed stock market losses.

Still, concerns about the strength of the U.S. economic recovery sent U.S. crude oil prices down more than $3 around mid-session. In early afternoon, crude for September delivery was down $2.65, or 3.76 percent, at $67.87 per barrel.

The yen rallied as investors' tolerance of risk decreased. The dollar was down 0.7 percent against the Japanese currency at 94.71. The euro , however, firmed 0.4 percent against the dollar at $1.4226.

The benchmark 10-year U.S. Treasury note rose 17/32 in price to yield 3.54 percent after the Labor Department said U.S. consumer prices were flat in July and fell over the past 12 months at the fastest rate since 1950. Yields on 10-year notes had closed at 3.60 percent on Thursday.

The 30-year U.S. Treasury bond was up 29/32, yielding 4.39 percent from Thursday's close of 4.43 percent.

The contained inflation reading helped depress yields by reinforcing a view that the Federal Reserve -- the U.S. central bank -- will maintain benchmark interest rates near zero for a long time even after the economy emerges from recession.

"The pop (in Treasury prices) was related to a really soft inflation reading," said William Hornbarger, senior fixed income strategist with Wells Fargo Advisors in St. Louis, Missouri. (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog click on http://blogs.reuters.com/hedgehub) (Additional reporting by Chuck Mikolajczak and Richard Leong in New York and Carolyn Cohn and Brian Gorman in London; Editing by James Dalgleish)