Updated at 10:26 a.m. ET (1426 GMT

By Chris Prentice and Naomi Rovnick

NEW YORK/LONDON Aug 2 (Reuters) - Weak U.S. data reaffirmed investor worries on Friday, fueling a sell-off in global equities and pressuring U.S. Treasury yields to multi-month lows.

Richly valued technology firms took much of the pain, and an index of European bank stocks headed for its largest weekly decline in 17 months on soft earnings.

The VIX stock market volatility measure .VIX, dubbed Wall Street's fear gauge, surged.

Investors turned to safe havens, including government debt and gold, as Friday's U.S. jobs report flagged unexpectedeconomic weakness.

Markets were alreadyrattled by downbeat earnings updates from Amazon and Intel and Thursday's softer-than-expected U.S.U.S. factory activity survey and the monthly U.S. non-farm payrolls report, which showed job growth slumped to 114,000 new hires in July from 179,000 in June.

The weak data raised expectations of multiple rate cuts by the Federal Reserve this year, which just this week opted to keep rates unchanged.

"The jobs data are signaling substantial further progress that the Federal Reserve made a policy error by not reducing the Fed Funds rate this week," said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.

"It’s very possible the Fed alters its inter-meeting communications on the balance of risks to remove all doubt all a September rate cut. "

With thin summer trading likely exaggerating moves, a slump that began in Asia with a 5.8% drop for Japan's Nikkei .N225, its biggest daily fall since March 2020 during the COVID-19 crisis, rippled through Europe and headed for Wall Street.

MSCI's global stock .MIWD00000PUS gauge MSCI's gauge of stocks across the globe fell 2.26% to 785.26.

The Dow Jones Industrial Average .DJI fell 569.93 points, or 1.41%, to 39,778.04, the S&P 500 .SPX lost 119.44 points, or 2.19%, to 5,327.24 and the Nasdaq Composite .IXIC lost 560.79 points, or 3.26%, to 16,633.36.

The STOXX 600 .STOXX index fell 2.42%, while Europe's broad FTSEurofirst 300 index .FTEU3 fell 49.58 points, or 2.44%

Emerging market stocks .MSCIEF fell 23.92 points, or 2.20%, to 1,063.88. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 2.27% lower 2.27%, at 554.93.

Japan's Nikkei .N225 fell 2,216.63 points, or 5.81%, to 35,909.70.

The Fed has kept benchmark borrowing costs at a 23-year high of 5.25%-5.50% for a year, and some analysts believe the world's most influential central bank may have kept monetary policy tight for too long, risking a recession.

Money markets on Friday rushed to price a 70% chance of the Fed, which was already widely expected to cut rates from September, implementing a jumbo 50 basis points cut next month to insure against a downturn.

The "employment report flashes a warning signal that this economy does have the ability to turn rather quickly," said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management in Minneapolis.

"Ultimately, today’s employment data should embolden the committee to cut policy by more than 25 basis points at the next meeting."

RUSH AWAY FROM TECH, TO SAFE HAVENS

Shares in U.S. chipmaker Intel INTC.O tumbled to a more than 11-year lowafter the group suspended its dividend and announced hefty job cuts alongside underwhelming earnings forecasts.

Artificial intelligence chipmaker Nvidia .NVDA, one of the biggest contributors to the tech rally, dropped 4.2%

Nvidia, up more than 700% since January 2023, has left many asset managers with an outsized exposure to the fortunes of this single stock.

Safe-haven buying went full throttle, withgovernment debt, gold and currencies traditionally all rallying. They are assets viewedas likely to hold value during market chaos.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 15 basis points to 3.828%, from 3.978%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, fell 24.6 basis points to 3.9187%, from 4.165%.

In foreign exchange markets, the yen added over 1%,JPY=EBS extending a rapid bounceback asthe Bank of Japan raising interest rates to levels unseen in 15 years.

In commodities, spot goldXAU added 0.92% to $2,467.89 an ounce. U.S. gold futures GCc1 gained 1.4% to $2,469.10 an ounce.

Oil prices, however, took a hit on the growth worries. U.S. crude CLc1 lost 3.3% to $73.79 a barrel and Brent LCOc1 fell to $77.19 per barrel, down 2.93% on the day.

Both benchmarks have fallen around 10% over the past four weeks in the longest run of weekly losses this year.

Additional reporting by Rae Wee in Singapore. Editing by Sam Holmes, Christopher Cushing, Christian Schmollinger, Andrew Heavens, Louise Heavens, Alex Richardson and Marguerita Choy

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