(Adds oil, gold settlement prices)
* Long-dated Treasury yields hover near multiyear highs
* Tech stocks suffer on slowing demand concerns
* Sterling strengthens on hopes for Brexit deal
By Herbert Lash
NEW YORK, Oct 10 (Reuters) - World equities slid to a three-month low on Wednesday and Wall Street fell more than 2 percent as technology shares tumbled on fears of slowing demand, while rising U.S. bond yields provided competition for high-riding stocks.
Major equity indexes in Europe fell more than 1 percent, also pulled down by technology shares, and gold prices inched up as some investors sought refuge in the metal.
"The S&P 500 is looking very weak and negative and that is putting fear into investors," said Michael Matousek, head trader at U.S. Global Investors. "With the markets going down people are increasing their allocation towards gold."
On Wall Street, the Philadelphia Semiconductor index tumbled 3.15 percent after Swiss vacuum valve maker VAT Group said demand was softening from chip equipment makers.
Among the tech sector's worst performers in Europe, Austrian chipmaker AMS fell 5.9 percent and STMicroelectronics closed down 5.8 percent.
Benchmark U.S. 10-year Treasury notes fell 3/32 in price to push their yield up to 3.2215 percent. Yields on shorter-term 2-year and 3-year notes hovered just under 3 percent, providing long-absent competition for equities.
The rise in U.S. Treasury yields has been bolstered by solid U.S. economic data that has reinforced expectations of multiple rate hikes over the next 12 months by the Federal Reserve.
Stocks and bonds traditionally have been in a tug of war for capital, but for the past 10 years bonds have had one arm tied behind their back, said Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors in Chicago.
"Short-term bonds are getting to be a compelling place to hang out," he said. "This orphan status that equity markets have enjoyed for the last 10 years is disappearing and finally getting some competition from the bond market."
The Dow Jones Industrial Average slid 606.13 points, or 2.29 percent, to 25,824.44. The S&P 500 lost 69.89 points, or 2.43 percent, to 2,810.45 and the Nasdaq Composite tumbled 234.09 points, or 3.03 percent, to 7,503.92.
MSCI's gauge of stocks across the globe fell 1.77 percent, its biggest single-day fall since March. The pan-European FTSEurofirst 300 index of leading regional shares closed down 1.57 percent.
The euro and sterling rose, underpinned by optimism for a Brexit deal, while the dollar lost ground against a basket of currencies even as U.S. yields hovered near multiyear peaks.
European Union Brexit negotiator Michel Barnier signaled progress on a deal with the UK over its withdrawal from the bloc.
"There is more optimism that they will find some agreement between Britain and the European Union before Brexit," said Steve Englander, global head of G10 FX research at Standard Chartered Bank in New York.
The dollar index fell 0.14 percent, with the euro up 0.24 percent to $1.1517. The Japanese yen strengthened 0.44 percent versus the greenback at 112.47.
Oil prices fell more than 2 percent as U.S. stocks plunged, even though energy traders worried about shrinking supply from Iran due to U.S. sanctions and kept an eye on Hurricane Michael, which closed nearly 40 percent of U.S. Gulf of Mexico output.
U.S. crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09.
U.S. gold futures settled up $1.9, or 0.16 percent, at $1,193.4.
Reporting by Herbert Lash in New York; Editing by Matthew Lewis and Cynthia Osterman