GLOBAL MARKETS-World equities fall on valuation fears, bonds steady

* MSCI World index down 0.7 pct, European index down 1.4 pct

* Thursday's sharp sell-off on Wall Street takes global toll

* Safe-haven dollar, bonds trade near break-even (Adds opening of U.S. markets, byline, dateline; previous LONDON)

By Herbert Lash

NEW YORK (Frankfurt: HX6.F - news) , April 11 (Reuters) - Global equity markets fell on Friday as fears on Wall Street about over-stretched stock valuations spread to Asia and Europe, even as Wall Street staged a modest comeback and safe-haven bonds and the dollar traded near break-even.

The Nasdaq composite, which has been pounded in recent days as investors bailed out of high-flying technology and biotechnology shares, traded near break-even. The Nasdaq on Thursday recorded its biggest drop in two-and-a-half years. The benchmark S&P 500 index also pared losses on Friday to trade flat.

The Nasdaq biotech index, after falling more than 20 percent from a recent high, rose 1.6 percent.

A benchmark of global equities fell to a two-week low, spurred by a broad risk-averse tenor among investors that led to sell-offs in higher-yielding currencies and emerging market assets.

"There's been contagion from the correction in the U.S. which is probably not over. But the fact is, this is mostly a U.S. correction," said David Thebault, head of quantitative sales trading at Global Equities in Paris.

"People are getting out of overvalued sectors and looking for bargains elsewhere. The market's positive longer-term trend is still intact, this pull-back will just remove the froth," he said.

The slide in global equities persisted in the wake of disappointing quarterly results from JPMorgan Chase & Co (NYSE: JPM - news) . , the biggest U.S. bank. This exerted more pressure on the benchmark Standard & Poor's 500 index, which on Thursday suffered its biggest one-day drop in two months.

Shares of JPMorgan sank 3.1 percent to $55.63, and the S&P financial index lost 0.4 percent and was the worst performing S&P sector.

Benchmark 10-year Treasuries notes pared gains to trade flat to slightly lower, after earlier trading 4/32 higher in price yield 2.614 percent,

"This equity market meltdown has brought a 'fear' bid into bonds," said Larry Milstein, head of government and agency trading at R.W (SES: E2:OJ4.SI - news) . Pressprich & Co. in New York.

MSCI (NYSE: MSCI - news) 's all-country world equity index fell to lows last seen in late March and was last trading down 0.7 percent.

European technology stocks led sectoral falls with a 2.5 percent decline, echoing U.S. declines. The tech sector in Europe had rallied more 40 percent since November 2012 through the start of April.

The pan-European FTSEurofirst 300 of leading regional shares fell 1.4 percent to 1,312.61.

On Wall Street, the Dow Jones industrial average fell 33.72 points or 0.21 percent, to 16,136.5. The S&P 500 lost 0.55 points, or 0.03 percent, to 1,832.53 and the Nasdaq Composite added 6.998 points, or 0.17 percent, to 4,061.104.

The dollar index, which measures the greenback against six major currencies, rose 0.12 percent, and the dollar edged higher against the yen, up 0.15 percent. The euro rose slightly against the dollar.

"Bad news for the world is good news for the dollar," said Steven Englander, managing director and global head of G10 FX strategy at CitiFX in New York. "Once fears about the equity market intensified, they picked up a more conventional type of mode to buy the dollar."

Brent oil futures gained slightly. Brent crude was up 27 cents at $107.73 a barrel. U.S. oil was up 61 cents at $104.01 a barrel. (Reporting by Herbert Lash; Additional reporting by Atul Prakash in London; Editing by Leslie Adler)