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* Chinese exports drop 10 pct in September - report
* Gold ticks up, dollar near session low
* Materials, financials drop the most
* Indexes down: Dow 0.92 pct, S&P 0.90 pct, Nasdaq 1.03 pct (Adds details, changes comment, updates prices)
By Yashaswini Swamynathan and Tanya Agrawal
Oct 13 (Reuters) - The S&P 500 and the Dow Jones Industrial average touched three-month lows on Thursday, dragged down by weak Chinese economic data and a potential U.S. interest rate hike by the end of the year.
Data showed China's exports fell 10 percent in September, far worse than the markets had expected, while imports unexpectedly shrank, reviving concerns about the health of the world's second-largest economy.
The Fed on Wednesday released the minutes of its last rate-setting meeting that showed several policymakers felt a rate hike was warranted "relatively soon" if the U.S. economy continued to strengthen.
Losses were broad based, with ten of the 11 S&P sectors trading lower. The financial index fell the most in a month.
Berkshire Hathaway, Bank of America, Wells Fargo and JPMorgan were the biggest drags on the index, falling between 2.2 and 1.7 percent. JPMorgan, Citigroup and Wells Fargo are due to report quarterly results on Friday.
Traders are pricing in about a 70 percent chance for a December rate hike, data from the CME Group's FedWatch tool showed.
Prices of gold, a safe haven, ticked higher, while the dollar, which is near a seven-month high, fell 0.3 percent against a basket of major currencies.
"China's export numbers are putting pressure on the market while the Fed prepares to raise interest rates," said Robert Pavlik, chief market strategist at Boston Private Wealth.
"There are also concerns regarding Brexit and investors are waiting to see what banks report this quarter. It's like everything is happening at the same time."
The CBOE Volatility Index, a gauge of near-term investor anxiety, jumped as much as 13 percent and was near its one-month high.
At 10:56 a.m. ET (1456 GMT) the Dow Jones industrial average was down 166.96 points, or 0.92 percent, at 17,977.24, the Nasdaq Composite was down 54.00 points, or 1.03 percent, at 5,185.02.
The S&P 500 was down 19.2 points, or 0.9 percent, at 2,119.98.
The index had closed below the 2,140 mark on Thursday, confirming a break below its 100-day moving average, which had served as technical support over the past month.
Market valuations will be put to test during the earnings season, with profits of S&P 500 companies currently expected to fall 0.7 percent, according to Thomson Reuters data.
The benchmark S&P 500 index is trading at 17 times forward earnings, compared with its 10-year median of 14.7, according to StarMine data.
Utilities, perceived as safer equity assets, were the only gainers.
Deutsche Bank's Frankfurt-listed stock fell 3.4 percent after sources told Reuters that the bank was introducing a hiring freeze as it seeks to cut costs amid a deep strategic overhaul.
The bank's U.S. shares were down 3.2 percent.
Marriott Vacations plunged nearly 10.2 percent to $61.80 after reporting a sharp decline in quarterly revenue from Europe.
Declining issues outnumbered advancing ones on the NYSE by 2,276 to 599. On the Nasdaq, 1,943 issues fell and 626 advanced.
The S&P 500 index showed no new 52-week highs and six new lows, while the Nasdaq recorded 12 new highs and 64 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)