By Marc Jones

LONDON, July 25 (Reuters) -Stock markets were locked in a multi-trillion dollar tailspin on Thursday as a slump in global tech stocks sent investors fleeing to traditional safe havens like bonds, the yen and Swiss franc.

Europe's main bourses thudded more than 1% lower in early moves 0#.INDEXE as both there and in Asia traders reacted to Wednesday's worst day for the Nasdaq since 2022 .IXIC after underwhelming earnings from the likes of Alphabet and Tesla. .N

Chinese stocks, iron ore and oil prices had all dropped further too after the country's central bank sprang a surprise cut in longer-term interest rates, only stoking further worries about the world's second-largest economy.

The sell-off in stocks saw investors ramp up bets on rate cuts globally, with futures implying a 100% chance of a Federal Reserve easing in September. A spike in market volatility .VIX fuelled a vicious squeeze on carry trades which saw the U.S. dollar sink another 0.7% to 152.78 yen on Thursday. FEDWATCH

MSCI's broadest index of world stocks .MIWD00000PUS lost 1%, while Japan's Nikkei .N225 tumbled 3.3%, exacerbated by a 11% plunge in Nissan Motor 7201.T after its quarterly profit slumped 99%.

Taiwan's markets .TWII were closed for a second day due to a typhoon.

Chinese blue-chips .CSI300 slid 0.9% with the Shanghai Composite index .SSEC falling 0.9% to a five-month low. Hong Kong's Hang Seng .HSI plunged 1.7%, finding little support from Beijing's latest easing step.

On Wall Street, the Nasdaq .IXIC had lost almost 4% as lacklustre Alphabet and Tesla earnings undermined investor confidence in the already lofty valuations of the "Magnificent Seven" stocks. .N

That added to recent market volatility, with Wall Street's fear gauge .VIX jumping to a three-month high. Investors looked for the safety of cash and super-liquid short term debt, with U.S. two-year yields hitting their lowest in almost six months on Wednesday.

"There are a multitude of drivers at the moment especially what is going on with the stock markets"senior FX and Macro strategist at BNY Mellon in London, Geoff Yu, said

He also pointed to weakening car sales in the U.S., Europe and Japan, and a China's rates moves this week as a clear sign of softening global consumer demand.

"With the policy responses, markets will be saying bad news is bad news," he added.

YEN SURGE

The other big mover was the safe-haven yen, up over 1% to the strongest level in 2-1/2 months. It surged overnight, with the upward momentum intact ahead of the Bank of Japan's meeting next week where policymakers will debate whether or not to raise interest rates.

The Swiss franc CHF= also rose 0.5% to 0.88 per dollar, having gained 0.7% overnight.

Short-dated bonds rallied, supported by comments from former New York Fed president Dudley that the central bank should cut rates, preferably at its policy meeting next week.

The yield on two-year Treasuries US2YT=RR fell another 3 basis points to 4.3894%, having dropped 4 bps on Wednesday. Ten-year yields US10YT=RR also eased 2 bps to 4.2622% on Thursday.

Markets are fully pricing in a quarter-point rate cut from the Fed in September, with even some risk for a 50 bp cut. For all of 2024, a total easing of 65 basis points has been priced in. FEDWATCH

"The rate cut expectations are getting very elevated the same way as they were last year," said Andrew Lilley, chief rates strategist at Barreyjoey in Sydney.

"My worry is that the market is getting ahead of the economic data because we have seen previously that these short-term dips in inflation haven't been sustained."

Indeed, advance U.S. gross domestic product data is due later on Thursday and is forecast to show growth picking up to an annualised 2% in the second quarter. The closely watched Atlanta Fed GDPNow indicator points to growth of 2.6%, indicating some risk to the upside.

In commodity markets, iron ore prices fell almost 1% as China concerns weigh, copper buckled 1.2%, while oil prices were pinned near six-week lows. O/R

Brent LCOc1 futures fell 0.5% to just over $81 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 also dropped a similar amount to $77.23. Gold fell 1% to $2,373.62 an ounce XAU=. GOL/

Additional Reporting by Stella Qiu and Wayne Cole in Sydney; Editing by Angus MacSwan

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