* Stocks fall worldwide on Obama plan to curb risk-taking
* Dollar falls vs yen, euro as Obama hurts risk appetite
* Oil slips below $75 a barrel as commodities hit
* U.S. bonds fall on supply concerns, profit-taking (Updates with U.S. markets, changes byline; dateline previously LONDON)
By Herbert Lash
NEW YORK, Jan 22 (Reuters) - Commodity prices tumbled and global stocks posted their worst week in months on Friday as investors turned to safer assets after U.S. President Barack Obama's move to curb risk-taking by banks sparked widespread unease.
Oil slid under $75 a barrel as nearly all commodity prices were pressured by Obama's proposals on Thursday to limit banks' trading activities, which have boosted their presence heavily in commodities. For details see: [ID:nSGE6OL051]
U.S. stocks fell more than 2 percent in the worst week since March for the Dow, and since October for the Nasdaq and S&P 500. The slide erased all gains for stocks in 2010.
The CBOE Market Volatility Index <.VIX>, known as Wall Street's fear gauge, rose 55.6 percent since Wednesday in its biggest three-day jump in almost three years.
The sour mood intensified on Friday with uncertainty over the pending confirmation vote for Federal Reserve Chairman Ben Bernanke to a second term as two Senate Democrats said they would vote against Bernanke.
The stunning election victory earlier this week of Republican Scott Brown in Massachusetts for the U.S. Senate seat of the late Edward Kennedy, costing Democrats their sure-fire majority, also added to the sense of uncertainty.
"Between uncertainty over Bernanke, Obama's bank regulation proposal and the election in Massachusetts, the market is like a cork in the water and the Democrats just hit the flush," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
The Dow Jones industrial average <.DJI> closed down 216.90 points, or 2.09 percent, to 10,172.98. The Standard & Poor's 500 Index <.SPX> slid 24.72 points, or 2.21 percent, to 1,091.76. The Nasdaq Composite Index <.IXIC> fell 60.41 points, or 2.67 percent, to 2,205.29.
The slide in equity markets helped crude oil to extend losses, while gold hit a one-month low and silver also fell. Other metal prices remained depressed, with both zinc and nickel falling about 5 percent. [ID:nLDE60L100]
The exit from risky trades pulled the U.S. dollar lower against the euro and yen, but the euro rebounded from Thursday's near six-month low against the greenback. [ID:N21OLLAR4]
The yen, which often benefits when investors grow nervous, touched a five-week high against the dollar and hit a nine-month peak against the euro.
An aversion to risk drove markets after Obama's dramatic proposals on banks, which potentially could rewrite the world financial order. The lack of details only heightened the sense of uncertainty, investors said.
"The bottom line here is we have no idea how the banking plan is about to unfold, if indeed it does," said Peter Dixon, an economist at Commerzbank in London.
"The markets are always going to sell off when there is uncertainty. I think this is the story for today and will be for the next week," Dixon said.
Oil fell to four-week lows as equity markets slumped.
U.S. crude
ICE Brent crude
U.S. gold futures ended down, off a one-month low hit earlier in the session. [ID:nN22116211]
Gold for February delivery
Oil, gold and base metals initially got some support from dollar weakness, but later resumed losses on the proposals to restrict banks or financial institutions from investing in, owning, or sponsoring a hedge fund or a private equity fund.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.04 percent at 78.292.
The euro
With no U.S. data being reported on Friday, investors and traders had only the proposed banking legislation to focus on, said Kathy Lien, director of currency research at GFT in New York.
"Whenever there is political uncertainty, traders always sell first and ask questions later," Lien said.
U.S. government debt prices slipped as investors cashed in on the previous day's rally and prepared for a series of auctions next week. [ID:nN22139341]
Prices in the long end of the yield curve fell most
significantly, with the 30-year U.S. Treasury bond
The benchmark 10-year U.S. Treasury note
Earlier in Asia, Japanese stocks <.N225> fell 2.56 percent to a three-week closing low, while the MSCI Asia-Pacific index excluding Japan <.MIAPJ0000PUS> was down 1.75 percent and looked set for a loss of 4.8 percent this week. (Reporting by Rodrigo Campos, Michael O'Boyle and Emily Flitter in New York; Emma Farge and Joanne Frearson; writing by Herbert Lash; Editing by Leslie Adler)