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* U.S. Treasury bond curve inverts for 1st time since 2007
* Macy's slides after FY outlook cut; weighs on rivals
* Rate-sensitive banks slump
* Indexes down: Dow 2.12%, S&P 2.14%, Nasdaq 2.38% (Changes comment, adds details, updates prices)
By Medha Singh
Aug 14 (Reuters) - Wall Street main indexes slid more than 2% on Wednesday, as a closely watched U.S. bond market indicator pointed to a renewed risk of recession following poor economic data from Germany and China.
Yields on the two-year Treasury notes rose above the 10-year yield for the first time since 2007, a metric widely viewed as a classic recession signal.
The interest-rate sensitive bank index slipped 3.7% and the broader financial sector fell 3.0% in response.
Slumping exports sent Germany's economy into reverse in the second quarter, while Chinese industrial output growth cooled to a more than 17-year low in July, underscoring the impact of a bruising U.S.-China trade war on global growth.
"Every economic number that comes out globally will be seen through the lens of how much trade tensions will negatively impact growth and subsequently markets," said Massud Ghaussy, senior analyst, Nasdaq IR Intelligence in New York.
The downbeat mood followed a rally in Wall Street's main indexes on Tuesday thanks to the Trump administration's decision to delay tariffs on some Chinese imports. At current levels, the benchmark S&P 500 is down 2.7% from the previous session's high.
The CBOE Volatility index, also known as Wall Street's "fear gauge, rose 4.08 points to 21.60.
"Investors don't know when and how the trade war will be resolved and as long as the situation persists, markets will not be able to frame risk and we should continue to see volatility," Ghaussy said.
At 11:07 a.m. ET, the Dow Jones Industrial Average was down 557.26 points, or 2.12%, at 25,722.65, the S&P 500 was down 62.63 points, or 2.14%, at 2,863.69. The Nasdaq Composite was down 190.71 points, or 2.38%, at 7,825.65.
Ten of the 11 major S&P sectors were in the red, with the energy sector's 3.4% drop leading the decliners.
Shares of Apple Inc were down 2.1% after boosting markets a day earlier with a 4% rise. Chipmakers were also down, with the Philadelphia chip index slumping 3%.
The biggest decliner on the S&P 500 index was Macy's Inc , down 15.9%, after the department store operator cut its full-year profit forecast as it discounted heavily to clear excess spring season inventory.
Rivals Kohl's Corp, Target Corp and Nordstrom Inc slipped between 2.7% and 10.8%.
Declining issues outnumbered advancers for a 4.45-to-1 ratio on the NYSE and for a 4.90-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and 42 new lows, while the Nasdaq recorded 12 new highs and 172 new lows. (Reporting by Medha Singh and Arjun Panchadar in Bengaluru; Editing by Anil D'Silva)