* USD index on track for largest drop in over a year
* Major Wall Street indexes set for steep weekly pullback
* Tracking the novel coronavirus: tmsnrt.rs/3aIRuz7 (Updates prices, comments; changes byline, dateline; previous LONDON)
By Rodrigo Campos
NEW YORK, Feb 27 (Reuters) - Stocks across the globe and oil prices continued to tumble on Thursday and U.S. Treasury yields hit record lows as traders fretted over the economic impact of the spreading coronavirus.
Governments battling outbreaks from Iran to Australia shut schools, canceled big events and stocked up on medical supplies in a race to contain the rapid global spread of the virus.
Bets that the U.S. Federal Reserve will cut interest rates to help soften the expected blow to the world's largest economy set the dollar on track for its largest daily drop against a basket of currencies in more than a year.
On Wall Street, major indexes were set for their steepest weekly pullback since the global financial crisis more than a decade ago as rising numbers of new infections outside China raised fears of a pandemic.
"Markets have come to realize that the outbreak is much worse and are now realistically pricing in the impact of the virus on the economy," said Philip Marey, senior U.S. strategist at Rabobank. "In that sense it's a bit of a catching up from the relative optimism that was there in the beginning when markets thought (the virus) will be contained to China with some minor outbreak outside."
The Dow Jones Industrial Average fell 744.41 points, or 2.76%, to 26,213.18, the S&P 500 lost 86.69 points, or 2.78%, to 3,029.7 and the Nasdaq Composite dropped 290.67 points, or 3.24%, to 8,690.10.
The pan-European STOXX 600 index lost 4.35% and MSCI's gauge of stocks across the globe shed 2.53%.
Emerging market stocks lost 1.19%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.24% lower, while Japan's Nikkei lost 2.13%.
With the infection rate in China appearing to be slowing, the blue-chip CSI300 index finished up 0.3%. China's central bank said on Thursday it would ensure ample liquidity to help limit the impact of the epidemic.
The dollar fell as Treasury yields continued to plumb new lows and investors bet that the Fed would cut interest rates to offset the impact of the spreading coronavirus.
"Safe-haven currencies are doing very well and gold is heading back higher, and unless we see a slowdown in the coronavirus cases outside China, risk sentiment will continue to be undermined," said Peter Kinsella, global head of FX strategy at UBP in London.
The dollar index fell 0.747%, with the euro up 1.13% to $1.1002. Sterling was last trading at $1.2887, down 0.12% on the day.
The Japanese yen strengthened 0.57% versus the greenback at 109.79 per dollar.
Gold, sought as a safe-haven, added 1.0% to $1,655.50 an ounce.
Oil prices plunged for a fifth day on fears of a pandemic that could slow the global economy and dent demand for crude.
U.S. crude fell 5.4% to $46.10 per barrel and Brent was last at $51.15, down 4.27% on the day.
Reporting by Rodrigo Campos, additional reporting by Medha Singh in Bengaluru, Noah Browning in London, Kate Duguid in New York and Ross Kerber in Boston; Editing by Will Dunham