US STOCKS-Wall St opens lower for second straight session

* AOL (Xetra: 6OL.DE - news) jumps on Verizon (NYSE: VZ - news) 's offer to buy company for $4.4 bln

* 10-yr U.S. Treasury yields at more than 6-month high

* Indexes down: Dow 0.7 pct, S&P 0.6 pct, Nasdaq 0.9 pct (Updates to open)

By Tanya Agrawal

May 12 (Reuters) - U.S. stocks fell for the second straight session on Tuesday amid a global bond sell-off and concerns over Greece's perilous financial situation.

All the three major indexes hit their lowest in a week, with the Dow Jones and the Nasdaq down more than 1 percent in early trading.

Ten-year U.S. Treasury yields, the benchmark for global borrowing costs, touched their highest since mid-November. Elevated U.S. yields mean higher corporate borrowing costs, which can affect stock markets across the world.

"The bond sell-off is knocking the wind out of equities," said Peter Cardillo, chief market economist at Rockwell Global Capital (Other OTC: CGHC - news) in New York.

"With bond yields moving up, this could be the catalyst for the market to correct."

The U.S. stock market has been trading at historically expensive valuations, fueled by ultra-low borrowing costs.

The S&P 500 is trading at 17 times expected earnings, compared with its historical 10-year median average of 15, according to Thomson Reuters StarMine data.

AOL shares jumped 17.8 percent to $50.20 after Verizon Communications (Xetra: 868402 - news) said it would buy the company in a $4.4 billion deal, giving it access to AOL's successful digital advertising service.

Verizon slipped 1.1 percent to $49.21, dragging the broader teleservices sector down as much as 1.4 percent.

All the 10 major S&P 500 sectors were down, with the infotech sector leading the declines with a 1.1 percent fall.

Apple (NasdaqGS: AAPL - news) fell 0.9 percent to $125.15 and Microsoft (NasdaqGS: MSFT - news) slid 1.6 percent to $46.61, making them the biggest drag on the S&P 500 and the Nasdaq Composite indexes.

Greece's precarious economic situation continued to weigh on the markets. Euro zone finance ministers, who met on Monday, acknowledged progress in talks between Greece and its creditors but said more work was needed to close a cash-for-reforms deal.

At 9:52 a.m. ET (1352 GMT) the Dow Jones industrial average was down 121.95 points, or 0.67 percent, at 17,983.22; the S&P 500 was down 13.46 points, or 0.64 percent, at 2,091.87 and the Nasdaq Composite was down 43.46 points, or 0.87 percent, at 4,950.11.

Pall Corp rose 19.5 percent to $118.72 after the Wall Street Journal reported the company was in the final stages of an auction to sell itself.

Gap fell 2.9 percent to $38.75 after the company reported comparable sales decline of 4 percent in the first quarter.

U.S. Federal budget numbers for April are expected to be released at 2 p.m. (1800 GMT)

Declining issues outnumbered advancing ones on the NYSE by 2,372 to 460, for a 5.16-to-1 ratio on the downside; on the Nasdaq, 1,867 issues fell and 460 advanced for a 4.06-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 2 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 10 new highs and 27 new lows. (Editing by Saumyadeb Chakrabarty)