* Chinese iron ore demand seen flattening * U.S. stocks dip 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 price rise that could hurt the global economy. Safe-haven Treasuries gave up most initial gains, however, as Wall Street trimmed some of its losses in the afternoon. 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 finished lower as investors took some profits after a rally on Monday drove the S&P 500 index to a level less than 10 percent shy of its 2007 record 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 ended down 68.94 points, or 0.52 percent, at 13,170.19, while the Standard & Poor's 500 Index lost 4.23 points, or 0.30 percent, to 1,405.52. The Nasdaq Composite Index fell 4.17 points, or 0.14 percent, to 3,074.15. 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 while permits for future construction jumped 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 0.14 percent against the greenback, to $1.3217. "The dollar is gaining because of its safe-harbor appeal on worries about Chinese growth," said Joe Manimbo, senior market analyst at Travelex Global Business Payments in Washington. U.S. crude oil prices dropped 2.48 percent to settle at $105.61 a barrel after Saudi Arabian Oil Minister Ali al-Naimi said the OPEC nation was pumping the highest level of oil in decades to supply every customer request, and was willing to immediately open the taps further if needed. Benchmark 10-year Treasury notes erased most of their gains as Wall Street trimmed losses but were still trading 3/32 higher in price to yield 2.36 percent, down from 2.38 percent late Monday.