* All 3 major Wall Street index fall more than 1 pct,
* European stocks, global shares also down over 1 pct
* Euro falls below $1.24, near two-year low
* Brent crude oil dives 3 pct to below $105
By Barani Krishnan
NEW YORK, May 30 (Reuters) - Benchmark U.S. Treasury yields fell to their lowest levels in at least 60 years on Wednesday, and stocks and commodities sold off as fears over the deepening euro zone debt crisis gripped investors.
The euro fell below $1.24, near a two-year low, as Italian borrowing costs soared and concerns mounted over Spain's banking sector. Crude oil prices fell 3 percent.
In equities markets, all three major indexes on Wall Street fell more than 1 percent, and European and global shares also fell by more than 1 percent.
Borrowing costs in Spain also rose, nearing the 7 percent level that had forced other euro zone nations to seek bailouts. Spain's stock market hit a nine-year low.
"Uncertainty remains high and headline risk is likely the key driver," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto. "The fear is that we only have Band-Aid solutions, and we still don't have a medium-term plan for Europe."
The yield on Spain's 10-year benchmark was at 6.675 percent. Italy's funding costs rose sharply at a bond sale on Wednesday, with 10-year yields topping 6 percent for the first time since January.
The euro neared a two-year low as Spain's central bank governor said the government would miss its deficit target this year.
The European Commission threw Spain two potential lifelines on Wednesday, offering more time to reduce its budget deficit and offering direct aid from a euro zone rescue fund to recapitalize distressed banks.
At noon, the Dow Jones industrial average was down 146.71 points, or 1.17 percent, at 12,433.98. The Standard & Poor's 500 Index was down 17.24 points, or 1.29 percent, at 1,315.18. The Nasdaq Composite Index was down 35.08 points, or 1.22 percent, at 2,835.91.
The FTSEurofirst 300 closed 1.5 percent lower at 975.74 points, having traded 105 percent of its 90-day volume average. The blue-chip Euro STOXX 50, which fell 2 percent, traded 70 percent of its volume average.
Spain's Ibex 35 index fell 2.8 percent to a nine-year low.
MSCI's all-country world equity index shed 1.6 percent.
The benchmark 10-year U.S. Treasury note was up 34/32, with the yield at 1.6322 percent.
German government yields also declined as the yield on 10-year Spanish sovereign debt rose to six-month highs on concerns over how Spanish banks will obtain capital to stay afloat.
The euro was last down 0.8 percent to $1.2400 after touching $1.2384, its lowest level since early July 2010. It also fell against the safe-haven yen, losing nearly 1.4 percent to trade near 97.90 yen, a four-month low.
The euro's weakness underpinned the dollar index, which measures the dollar against a basket of major currencies. The index rose above 82.923, its highest level since September 2010.
The rise in the dollar as well as fears over the European debt crisis dragged down commodities. Copper and platinum both sank to 4-1/2-month lows as investors piled into safe havens.
"As we've seen during other periods of extreme risk aversion, investors go into Treasury bonds, which are yielding record lows, or they stay in cash. It's preservation of capital," said analyst Robin Bhar at Societe Generale in London.
Oil fell 3 percent. London's benchmark Brent crude hovered at around $103, breaching the key $105 support level. U.S. crude in New York traded near $87.80, below the $90 support.
Gold, which serves as alternative play to the dollar, was down about half a percent at above $1,560 an ounce, recovering on a technical bounce after plumbing 1 percent earlier to below $1,540.