* Weak European car sales add to worries on global economy
* Gold recovers after sharp falls but remains volatile
* Brent crude drops below $99/barrel as demand worries persist
* Euro retreats from 7-week high versus dollar
By Herbert Lash
NEW YORK, April 17 (Reuters) - World equity markets and commodities fell on Wednesday as global growth concerns continued to take a heavy toll on investor sentiment and disappointing earnings reports weighed on Wall Street stocks.
Copper, considered a barometer for manufacturing and China-related growth, fell more than 3 percent, weighed by worries about the global economy and a 10.3 percent decline in March European car sales, a key source of metals demand.
U.S. and European shares fell more than 1 percent after the car sales report added to fears about Europe's economy and after the International Monetary Fund on Tuesday downgraded its global growth projections for this year and next.
Defying earlier industry predictions of a second-half rebound, auto sales in Europe are headed for a sixth straight annual decline to a two-decade low.
"The macro outlook remains bleak and equities markets are still not pricing it in yet," said Jerome Troin-Lajous, a trader with Louis Capital Markets. "It's time to get protection, continue to get out of cyclical and industrial stocks, and turn overweight (on) 'flight-to-safety' trades."
Gold rose, bucking the fall in oil and other commodities, after a slide to two-year lows this week lured Asian buyers. Sentiment was still severely shaken by the biggest two-day loss in 30 years that started last Friday.
Brent crude fell below $98 per barrel on the prospect of sluggish U.S. and Chinese fuel demand that will be squeezed at the same time by rising crude supplies in the United States.
The North Sea benchmark has lost nearly 6 percent over the past five sessions in a commodities rout triggered by data showing growth in China, the world's second-largest oil consumer, slowed unexpectedly in this year's first three months.
"At the moment the oil complex is in a technical downtrend with the fundamentals being driven by a deteriorating demand projection in a robust supply environment," said Dominick Chirichella of Energy Management Institute.
TECHNOLOGY SHARES AMONG BIGGEST DECLINERS
The benchmark S&P 500 index retreated a day after its second-best performance of the year on several disappointing earnings reports and the drop in commodities.
Apple Inc (NasdaqGS: AAPL - news) fell below $400 a share for the first time since late 2011 after a disappointing revenue forecast from key supplier Cirrus Logic (NasdaqGS: CRUS - news) fanned fears of weakening demand for the iPhone and iPad. The shares later pared losses, but were still down about 5 percent.
"After Monday's gold sell-off spooked U.S. equities, it seems as though the dip buyers are a bit less aggressive, allowing the market to fall a bit more," said Gordon Charlop, a managing director at Rosenblatt Securities in New York.
Speculation about a German debt downgrade sparked heavy selling in Europe, which accelerated when Wall Street opened, Charlop said.
Stephen Massocca, managing director of Wedbush Morgan in San Francisco, said equities had over-extended a recent rally that was marked by few declines.
"It's hard to put your finger on one particular negative thing that's driving this," Massocca said. "I don't think this is going to get worse than this. It was a long overdue cleansing of what had been complacency in terms of what the market was doing."
The Dow Jones industrial average was down 151.69 points, or 1.03 percent, at 14,605.09. The Standard & Poor's 500 Index was down 24.70 points, or 1.57 percent, at 1,549.87. The Nasdaq Composite Index was down 63.43 points, or 1.94 percent, at 3,201.20.
Shares of Intel Corp, the world's largest semiconductor maker, fell more than 1 percent after it said its current-quarter revenue would decline as much as 8 percent and it trimmed its 2013 capital spending plans. Shares of Texas Instruments, another chipmaker, shed 4.6 percent.
Bank of America Corp, the last of the four big U.S. banks to report first-quarter results, said revenue fell.
"Banks are clearly struggling," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which has $760 billion in assets. "Loan growth has been disappointing, which points to economic growth not being robust."
European shares fell to their lowest level in around four months. The broad FTSEurofirst 300 index extended a three-day losing streak, falling 1.5 percent to close at 1,147.76. The euro zone's blue-chip Euro STOXX 50 (Zurich: ^STOXX50E - news) index also retreated, falling 2.1 percent to 2,553.49 points.
Brent crude shed $1.94 to $97.97, while U.S. crude slipped $1.92 to $86.80.
Bonds resumed gains as world shares and industrial commodities responded to the concerns about economic growth.
"Whether against stocks or commodities, the demand for Treasuries remains firm," said Ian Lyngen, a senior government bond strategist at CRT Capital Group in Stamford, Connecticut.
The benchmark 10-year U.S. Treasury note was up 9/32 in price to yield 1.6916 percent.
The yen fell for a second straight day against the dollar and the euro on expectations that the Group of 20 major developed and emerging economies meeting in Washington will not voice strong concern over Japan's aggressive monetary easing, which has triggered a sharp slide in the yen.
The dollar rose 0.04 percent to 97.56 yen, although it remained below the four-year high of 99.94 yen set on Reuters data last week.
The euro slid from a seven-week high against the dollar, tracking losses in European shares. The euro slipped 1.1 percent to $1.3031.
Spot gold prices rose $14.37 to $1,382.10 an ounce.