* Global markets plunge, sterling hits 31-year low
* US investors brace for volatile stock trading session
* Futures on Wall St's VIX fear gauge jump
By Noel Randewich
SAN FRANCISCO, June 24 (Reuters) - Futures on the S&P 500 and Nasdaq (NasdaqGS: NDAQ - news) plummeted 5 percent early on Friday and triggered overnight circuit breakers after Britain's vote to quit the European Union catapulted global markets into turmoil.
The drastic drops in U.S (Other OTC: UBGXF - news) . stock index futures suggest Wall Street will open with steep losses later in the day, with the historic referendum sparking the biggest global financial shock since the 2008 financial crisis.
Investors sought refuge in the dollar and other safe-harbor assets as they worried about potential damage to the world's economy.
British markets plunged, with sterling hitting a 31-year low in its biggest fall on record. Britain's FTSE 100 stock index slumped 7 percent in early trade. Asian equity markets also tumbled.
"It's going to be ugly in the morning. This is going to catch a lot of people wrong-footed, end of discussion. Obviously markets were not pricing this in," said Mike Ellingsen, a stock trader at U.S. Global Investors Inc in San Antonio, Texas.
Trading in S&P 500 and Nasdaq futures was briefly halted after they fell more than 5 percent, triggering overnight limit thresholds. After trading resumed, they were down about 4 percent.
U.S. short-term interest rates futures rose to contract highs in early trading, spurring expectations the Federal Reserve might cut interest rates to help shield the economy from any global fallout.
Investors had been waiting for the Fed to raise borrowing costs in a nod to an improved economy, but weaker-than-expected growth in U.S. jobs in recent months forced to put off a rate hike at their meeting last week.
Reflecting fear among investors, futures on the VIX volatility index surged as much as 10.57 points to 27.20.
Tuttle Tactical Management, a Connecticut firm that manages exchange traded funds, will likely sell shares before U.S. stock exchanges officially open, said chief investment officer Matthew Tuttle.
"We're going to take our cue from Europe," Tuttle said. "You'll probably see a lot of selling at the open."
The last time the CME had a circuit breaker triggered on index futures was August last year, when a major sell-off in Chinese stocks pummeled shares around the world.
In recent sessions, U.S. stocks had risen as investors bet Britain would remain part of the European Union.
Leaving the EU could hit the $2.9 trillion British economy with a sharp economic slowdown, some forecasters say. A stronger dollar versus the pound, euro and other currencies would inevitably hurt U.S. companies selling goods and services abroad.
Britain was the fifth-largest buyer of U.S. exports last year with an estimated $56 billion in purchases according to the U.S. Census Bureau.
The S&P 500 was up 3 percent in 2016 as of Thursday's close. (Additional reporting by Richard Leong and Rodrigo Campos; Editing by Alison Williams)