(Adds U.S. market open, market details, changes dateline previous LONDON)
* 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 fell more than 1 percent on Wednesday, sliding to three-month lows, as technology shares slumped on fears of slowing demand, while rising U.S. bond yields made stocks less compelling.
On Wall Street, the Philadelphia Semiconductor index tumbled 3.07 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 were Austrian chipmaker AMS fell 6.6 percent and STMicroelectronics was down 5.6 percent.
Benchmark U.S. 10-year Treasury notes fell 3/32 in price to push their yield up to 3.2196 percent. But the yield on shorter-term 2-year and 3-year notes was just under or hovered at 3 percent, respectively, 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.
The fiscal and monetary policy signals for higher rates have been unambiguous, said Mike Terwilliger, portfolio manager of Resource Liquid Alternatives for the Resource Credit Income Fund in New York.
"Investors missing this rate move is tantamount to letting yourself get run over by a glacier," Terwilliger said.
Traditionally stocks and bonds have been in a tug of war for capital and for the last 10 years bonds have pulling on that rope with 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 get some competition from the bond market."
The Dow Jones Industrial Average fell 400.44 points, or 1.52 percent, to 26,030.13. The S&P 500 lost 43.98 points, or 1.53 percent, to 2,836.36 and the Nasdaq Composite dropped 169.06 points, or 2.18 percent, to 7,568.96.
MSCI's gauge of stocks across the globe shed 1.15 percent and the pan-European FTSEurofirst 300 index of leading regional shares lost 1.43 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 posted fresh 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 0.24 percent, with the euro up 0.35 percent at $1.1529. The Japanese yen strengthened 0.24 percent versus the greenback at 112.67.
Oil prices eased after the IMF lowered its global economic growth forecasts, but markets were supported as Hurricane Michael closed nearly 40 percent of U.S. Gulf of Mexico oil output and U.S. sanctions restricted Iranian exports.
U.S. crude was down 1.99 percent at $73.47 per barrel and Brent was last at $83.64, down 1.6 percent.
Reporting by Herbert Lash in New York Editing by Matthew Lewis