GLOBAL MARKETS-Dollar slides to 17-month low vs yen as stocks, oil fall

(Updates with New York market movements, changes dateline, byline, adds quote, updates details)

* Dollar falls more than 1 pct vs yen as stocks and oil slide

* European shares led lower by German factory orders slide

* Oil drops on fall in U.S (Other OTC: UBGXF - news) . gasoline demand

* German Bund yields back below 0.10 pct after factory data

By David Gaffen

NEW YORK, April 5 (Reuters) - The dollar fell on Tuesday to its weakest against the yen since October 2014 and stock markets worldwide slumped, as investors pulled away from riskier assets following weak economic data out of Europe and the United States.

Wall Street followed declines across Europe and Asia and the MSCI All-World Index dropped 1.3 percent, putting it on target for its worst day since early February.

Banking shares led the fall in the S&P 500 index as a drop in long-dated Treasury debt yields was seen eroding banks' profits. The S&P 500 lost 15.44 points, or 0.75 percent, to 2,050.69.

Shares (Berlin: DI6.BE - news) of Allergan (NYSE: AGN - news) were hammered after the U.S. Treasury Department on Monday unveiled rules designed to curb corporate tax inversion mergers that could possibly stymie the company's tie-up with Pfizer Inc (NYSE: PFE - news) . Allergan shares dropped 16 percent while Pfizer shares gained 1 percent.

In Europe, the FTSEurofirst 300 share index dropped 1.8 percent. Germany's DAX index slid 2.3 percent after data showed German industrial orders unexpectedly fell 2.1 percent in February due to weak foreign demand, especially from euro zone countries.

"The market is maybe giving up a little bit on the global growth story," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited in New York.

MSCI (NYSE: MSCI - news) 's broadest index of Asia-Pacific shares outside Japan fell 1.7 percent. Japan's Nikkei index dropped 2.4 percent to an eight-week closing low.

The Japanese currency, often sought in times of market turmoil or economic uncertainty, strengthened, with the dollar falling to 110.05 yen. Officials in Japan, including Bank of Japan Governor Haruhiko Kuroda, said overnight that the BOJ could provide more monetary stimulus such as pushing rates further into negative territory.

Further muddying the waters for investors, two senior officials of the U.S. Federal Reserve said the market's views of when the central bank would raise interest rates may be too pessimistic.

Just a week ago, Fed Chair Janet Yellen said the Fed would proceed cautiously in raising rates - remarks viewed as dovish and which drove U.S. stocks to 2016 highs.

The dollar fell more than one percent against the yen and last traded at 110.05 yen. The euro fell 0.2 percent to $1.1372.

Chinese shares bucked the trend, closing up 1.3 percent to 1.4 percent as trading resumed after a market holiday.

Oil, which fell in recent days on fading prospects of agreement among producers to curb oversupply, rebounded from earlier losses after data showing U.S. demand for gasoline declined in January for the first time in 14 months.

The U.S. Energy Information Administration said on Monday that gasoline demand fell 0.6 percent in January. Total U.S. oil demand fell 1 percent compared with January 2015.

Brent crude was up 3 cents to $37.72 a barrel, while U.S. crude gained 2 cents to $35.72 a barrel.

Yields on low-risk government bonds fell. German 10-year yields, the benchmark for euro zone borrowing costs, fell as far as 0.08 percent, lowest in almost a year.

U.S. 10-year Treasury yields fell nearly 6 basis points to 1.72 percent, lowest since March 1.

Gold (Other OTC: GDCWF - news) , another perceived safe haven and a top-performing asset in the first three months of 2016, rose more than 1 percent. It (Other OTC: ITGL - news) traded at $1,229.11 an ounce.

Copper rose 0.2 percent to $4,770.50 a tonne. (Additional reporting by Lisa Twaronite in Tokyo, Anirban Nag, Nigel Stephenson and John Geddie in London; Editing by Chizu Nomiyama)