* Turkish lira plunges to record low
* FT reports ECB worried about European bank exposure to Turkey
* Bank shares fall
* Euro falls to lowest since July 2017
* Yen climbs, bond yields fall
By Herbert Lash and Ritvik Carvalho
NEW YORK/LONDON, Aug 10 (Reuters) - A plunge in the Turkish lira rocked global equities and emerging markets on Friday and fear of more turmoil sent investors scurrying for safety in assets like the yen and U.S. government bonds.
The lira fell as much as 18 percent against the dollar in its worst day since Turkey's financial crisis of 2001. It followed a deepening rift with the United States, worries about its own economy and lack of action from policymakers.
President Tayyip Erdogan told Turks to exchange gold and dollars into lira as the currency tumbled after President Donald Trump doubled U.S. tariffs on metals imports from Turkey. The currency has fallen more than 40 percent this year, fanning worries about a full-blown economic crisis.
Bank shares across Europe fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying the European Central Bank was concerned about European lenders' exposure to Turkey.
The dollar rose as exposure to Turkey could impact European banks and spark a domino effect throughout Europe as people begin to pull out of those banks and into the U.S., said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC.
The turmoil makes it difficult for global investors to justify remaining in Europe and it is also negative for emerging markets.
"In that sense, the Turkey situation can be a contagion not only in Europe but across emerging markets," Anderson said.
Shares in France's BNP Paribas, Italy's UniCredit and Spain's BBVA, the banks seen as most exposed to Turkey, fell 4 percent or more.
An index of regional banking shares slid 3.7 percent while the pan-European STOXX 600 index fell 1.2 percent.
The MSCI All-Country World index, which tracks shares in 47 countries, was down 1.1 percent and erased all its gains for the week.
Wall Street opened lower.
The Dow Jones Industrial Average fell 185.15 points, or 0.73 percent, to 25,324.08. The S&P 500 lost 14.92 points, or 0.52 percent, to 2,838.66 and the Nasdaq Composite dropped 36.64 points, or 0.46 percent, to 7,855.15.
Investors piled into "safe" government debt, with German yields hitting three-week lows and the yield on the benchmark U.S. 10-year Treasury note falling to 2.88822 percent.
The safe-haven Japanese yen hit a one-month high of 113.38 against the dollar.
The dollar index, which measures the greenback's strength against a group of six major currencies, breached 96, taking it to its highest level since July 2017. It was last up 0.7 percent at 96.173.
Adding to emerging market currency woes was the Russian ruble, which weakened to 67.12 to the dollar. Overnight it had retreated to its lowest since November 2016 on threats of new U.S. sanctions, weakening beyond the psychologically important 65-per-dollar threshold.
Reporting by Ritvik Carvalho Writing by Herbert Lash Additional reporting by Dhara Ranasinghe in LONDON, Rodrigo Campos in New York, and Asia markets team; Editing by Janet Lawrence and Nick Zieminski