GLOBAL MARKETS-World stocks fall on banking, credit fears

(Recasts with U.S. markets, adds byline; dateline previous LONDON)

By Herbert Lash

NEW YORK, March 4 (Reuters) - Global stocks fell sharply on Tuesday as renewed worries about banking stress and a simmering global credit crunch spurred an equity sell-off and sent investors scurrying to safe-haven U.S. Treasury debt.

Oil fell sharply to below $100 a barrel as investors await the outcome of a meeting of the Organization of Petroleum Exporting Countries on Wednesday. Gold held to recent gains before making a renewed move closer to $1,000.

The dollar fell versus the yen and Swiss franc after Federal Reserve Chairman Ben Bernanke warned that U.S. mortgage delinquencies and foreclosures are likely to rise while home prices decline further, adding to fears of a U.S. recession.

The banking and credit woes were highlighted by concerns that the largest U.S. banking company, Citigroup Inc (C.N: Quote, Profile, Research) could need $15 billion more capital after already raising some $30 billion of capital from investors including Abu Dhabi, Kuwait and Saudi Prince Alwaleed bin Talal. A Merrill Lynch analyst made the projection based on further mortgage write-downs.

"It's going to take more than that (amount already raised) to rescue Citi," said Sameer al-Ansari, head of investment agency Dubai International Capital, at a private equity conference in Dubai.

The credit concerns pushed two-year Treasury note yields to the lowest since April 2004. Bernanke's comments, and the sell-off in equity markets, also lifted demand for safe haven treasuries.

U.S. stocks dropped more than 1 percent as Citi dropped to its nine-year low, down 4.7 percent at $22, and weighed on financial stocks generally. The sharp pullback in oil prices dragged down energy shares.