GLOBAL MARKETS-Disappointing earnings, Spain downgrades hit shares, euro

* Weak earnings, outlook hit Wall St; Dow dips nearly 2.0 pct

* European shares fall to lowest level in more than 1 1/2 months

NEW YORK, Oct 23 (Reuters) - Global shares and the euro tumbled on Tuesday after a slew of weak U.S. corporate earnings results and credit ratings downgrades of several indebted regions of

Spain. The Dow Jones industrial average was down nearly 2.0 percent, on disappointing profits and earnings outlook from large multinational companies including Dupont and United

Technologies. The euro slid to its lowest since Oct. 16 against the U.S. dollar to $1.2950, and last traded at $1.2964, down 0.7 percent on the day. The euro also dropped against the yen.

Bond prices in Spain fell after rating agency Moody's downgraded five of the country's regions, including economically important but deeply indebted Catalonia. ``Investor sentiment has

definitely changed from just a couple weeks ago when everything was received as good news to fear,'' said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg,

Pennsylvania. ``We've been hit today again with the harsh reality which is weak results and ongoing problems in the euro zone.'' The decline in stock prices was broad with all 10 of S&P 500

sectors were down. Dupont shares fell 8.7 percent to $45.48. In midday trade, the Dow Jones industrial average was down 235.83 points, or 1.77 percent, at 13,110.06. The Standard & Poor's

500 Index was down 23.42 points, or 1.63 percent, at 1,410.40. The Nasdaq Composite Index was down 35.74 points, or 1.18 percent, at 2,981.22. Global shares were down 1.5 percent. With the

market's recent decline, the Dow and the S&P 500 indexes have given up all of their gains since the European Central Bank's Sept 6. announcement of a plan to buy bonds of troubled euro-zone

nations. Reflecting market anxiety, the CBOE Volatility index, Wall Street's so-called fear gauge, jumped 15 percent to 19.01, while the Euro STOXX 50 implied volatility index rose 10

percent to 23.39.

U.S. EARNINGS DISAPPOINT With 145 of the S&P 500 companies having reported results so far, 63 percent have missed analysts' top-line expectations for revenue, the inverse of the usual, as 62

percent of companies have traditionally exceeded estimates since 1994, and 55 percent have beaten over the past four quarters, on average. Overall earnings for S&P 500 stock index companies

are expected to fall 2.5 percent in the third quarter from a year ago. Some 33 S&P 500 companies are due to report earnings on Tuesday, including Netflix and Harley-Davidson. Facebook Inc

is also scheduled to report after the bell.

SPAIN'S ECONOMY CONTRACTS AGAIN In other European news, according to Spain's central bank, the fourth largest economy in the euro zone contracted in the third quarter. European stocks fell

to their lowest level in more than one and a half months on Tuesday. The FTSEurofirst 300 index provisionally closed down 1.7 percent at 1,089.09 points - its lowest closing level since

ending at 1,079.24 points on Sept. 5. The euro plunged versus the yen and hit a one-week low versus the dollar. Financial markets are still waiting for a fiscal bailout request from Spain to

trigger the European Central Bank's new bond-buying program, which many believe would draw a line under any threat of default from the euro zone's fourth-largest economy. ECB Executive

Board member-in waiting, Yves Mersch, told an audience in Berlin that while there was no limit in terms of the amount of bonds the ECB could buy, there was a time limit.

Shortly before he spoke Spain sold short-term debt, with yields rising slightly on three-month paper and falling on six-month paper. Meanwhile, data showed business morale in France's

manufacturing sector slumped to its lowest level in over two years. The French data fueled fears that the euro zone's second largest economy may be on the brink of a recession, according to

Joe Manimbo, senior market analyst, Western Union Business Solutions in Washington D.C. ``But despite the latest flare up in worries about debt and growth in the euro region, the single

currency may see its downside somewhat cushioned by expectations Spain may be weeks away from requesting an international bailout, allowing the country to tap the ECB's bond buying program

to bring meaningful debt relief,'' he said.

BERNANKE ERA MAY BE CLOSING In the U.S., the Federal Reserve's policy committee is set to begin the first day of a two-day meeting on interest rate policy on Tuesday. The Federal Open Market

Committee is likely to hold off from taking fresh steps at the meeting, opting to review the impact of the significant action it took last month and keep a low profile in its last gathering

before the Nov. 6 general election. The New York Times reported Fed Chairman Ben Bernanke has told close friends he probably will not stand for a third term at the central bank even if

President Barack Obama wins the Nov. 6 election. Oil prices fell below $108 a barrel on Tuesday as investors brushed off Iran's threat to halt exports if the West tightens sanctions and

focused on a fragile world economy and its impact on oil demand growth. Brent crude for December delivery was down $1.72 to $107.72 per barrel. U.S. December crude was down $2.60 at $86.05 a

barrel. The benchmark 10-year U.S. Treasury note was up 14/32, with the yield at 1.7642 percent.

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