* Chinese iron ore demand seen flattening * U.S. stocks fall after strong rally * Growth-driven currencies fall on China, dollar up By Walter Brandimarte NEW YORK, March 20 (Reuters) - Renewed concerns about China's economic growth weighed on global stocks o n T uesday, while oil prices dropped more than 2 percent on expectations Saudi Arabia would act to stem any rise that could hurt the global economy. Safe-haven Treasuries gave up initial gains, however, as stocks trimmed some of their losses. Meanwhile, the dollar rose broadly as growth-related currencies were pressured by Chinese worries. Concerns about the scale of China's economic slowdown resurfaced as BHP Billiton, the world's largest miner, said it was seeing signs of "flattening" iron ore demand from the country. U.S. stock indexes were lower after a rally on Monday drove the S&P 500 index to a level less than 10 percent shy of its 2007 all-time high. "Do I think we are due for a pullback? Yes. Do I think this is the start of a pullback? No," said Mike Shea, managing partner and trader at Direct Access Partners in New York. "The news out of China caused everyone to look up and take a breath, but the sentiment hasn't changed. It's still bullish." The Dow Jones industrial average declined 54.53 points, or 0.41 percent, to 13,184.60, while the Standard & Poor's 500 Index fell 4.73 points, or 0.34 percent, at 1,405.02. The Nasdaq Composite Index dropped 10.96 points, or 0.36 percent, to 3,067.36. The S&P 500 has gained more than 11 percent so far this year as a steady flow of strong U.S. economic data encouraged stock investors. Tuesday's U.S. housing data was mixed, however, with housing starts falling in February but permits for future construction jumping to their highest since October 2008. World stocks measured by the MSCI All-Country World Index dropped 0.7 percent, after closing on Monday near levels last seen in late July. In Europe the FTSEurofirst 300 index closed down 1.1 percent as autos and miners were hit by worries of a Chinese slowdown. "Stocks are being driven down on reports of major discounts amongst the luxury good car brands in China and comments about weak iron ore demand," said Richard Batty, strategist at Standard Life Investments, with $248.37 billion of assets under management. The dollar rose 0.2 percent against a basket of major trading-partner currencies, according to the U.S. Dollar Index . The euro weakened 0.1 percent against the greenback, to $1.3222. "Investors are snapping up U.S. dollars this morning and the rally has all the characteristics of a safe-haven bid," said Kathy Lien, director of currency research at GFT Forex in Jersey City, New Jersey. U.S. crude oil prices dropped 2.4 percent to $105.40 a barrel. Benchmark 10-year Treasury notes were trading 1/32 lower in price to yield 2.39 percent, up from 2.38 percent late Monday.