* U.S. crude settles below $30/barrel
* Major U.S. stock indexes down about 2 pct
* European stocks drop 2 pct as BP , UBS slump
* U.S. Treasury yields fall to 9-month lows (Updates with U.S. afternoon trading)
By Lewis Krauskopf
NEW YORK, Feb 2 (Reuters) - U.S. and European stock indexes fell sharply on Tuesday and buyers sought safe-haven government bonds after another tumble in depressed oil prices.
Benchmark Brent crude LCOc1 settled down 4.4 percent, while U.S. crude CLc1 fell 5.5 percent, settling below $30 a barrel. Hopes faded for a deal between oil-producing nations to curb a massive supply glut. prolonged crude slide was reflected in results from oil majors BP BP.L , whose shares slumped after it posted a $6.5 billion loss for 2015, and Exxon (N:XOM) XOM.N , which posted its smallest quarterly profit in more than a decade. major U.S. stock indexes all were down about 2 percent in afternoon trading, led lower by energy shares, while the pan-European FTSEurofirst index .FTEU3 also dropped 2 percent.
Oil's renewed drag on equities comes as some investors recently have expressed hope that other markets were beginning to diverge from the performance of the beaten-down commodity.
"We still haven't broken the correlation between oil and equities and we are yet to find a bottom in oil prices," said Jeff Carbone, co-founder of Cornerstone Financial Partners in Charlotte, North Carolina.
The Dow Jones industrial average .DJI was off 284.28 points, or 1.73 percent, at 16,164.9, the S&P 500 .SPX was down 34.35 points, or 1.77 percent, at 1,905.03 and the Nasdaq Composite .IXIC dropped 96.67 points, or 2.09 percent, at 4,523.70.
"There is a lot of nervous, short-term money in this market that shouldn't be in the market," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "The sooner we get it out, the sooner we get capitulation, the sooner we can go back to a normal market."
The first results of the U.S. presidential primary season in Iowa also could be creating greater uncertainty for investors because there were no clear winners, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
U.S. Senator Ted Cruz of Texas edged businessman Donald Trump in the Republican race, while on the Democratic side, former Secretary of State Hillary Clinton won by a razor-thin margin against U.S. Senator Bernie Sanders of Vermont. equities were also dragged lower by Swiss bank UBS UBSG.VX , whose shares fell 6.8 percent after it reported a surprise outflow of funds from its flagship wealth management business. 46-country All World share index .MIWD00000PUS fell 1.7 percent.
U.S. Treasury yields fell to nine-month lows on safety buying as oil prices resumed their slide. 10-year notes US10YT=RR were up 28/32 in price to yield 1.8689 percent, down from 1.966 percent late on Monday.
"I think the reaction in the bonds is greater than you would think from the stimulus of oil and the stock market," said Lou Brien, a market strategist at DRW Trading in Chicago. "Part of it is, maybe people started leaning the wrong way last week if they thought we'd seen the bottom in crude and stocks."
Euro zone yields fell as European Central Bank chief Mario Draghi confirmed his commitment to review monetary policy next month. U.S. dollar index, which measures the greenback against a basket of six major currencies, fell 0.14 percent, while the euro EUR= was up 0.25 percent against the dollar. risk-off bias of the marketplace... typically favors yen and euro over the dollar," said Richard Franulovich, senior currency strategist at Westpac in New York.
(Additional reporting Karen Brettell and Sam Forgione in New York, and Tanya Agrawal in Bengaluru; Editing by Nick Zieminski and Dan Grebler)