GLOBAL MARKETS-Stocks drop, Swiss franc plunges on cenbank move

* Global stocks fall on fears of worsening European crisis

* Swiss franc tumbles on SNB's move to stop franc gains

* Benchmark German and U.S. debt yields near historic lows

* Gold slips from record high, still near $1,900 an ounce (Updates market action, adds quote)

By Richard Leong

NEW YORK, Sept 6 (Reuters) - Global stock markets fell on Tuesday on fears of the European debt crisis worsening, while the Swiss franc plunged 8 percent against the euro after Switzerland's central bank sought to slow the safe-haven rush into its currency, which it worries could hurt its economy.

Nervous investors channeled cash into less risky assets as doubts resurfaced over Italy and Greece's willingness to implement tough budget and debt measures demanded by other euro zone members, while Germany hardened its stand against giving them more aid. For more see [ID:nL5E7K61RE].

"Europe is where you have to be focused right now, and Europe doesn't look good," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

Wall Street stocks <.DJI> <.SPX> <.IXIC> were down nearly 2 percent after a three-day holiday weekend, with Friday's U.S. jobs report, which showed zero net jobs growth, also hurting investor confidence. [.N]

The Swiss central bank set a limit of 1.20 francs to the euro in an attempt to keep its currency strength from damaging the economy. Global investors have poured money into the Swiss franc seeking a relatively safe asset.

The move took some of the safe-haven shine off gold, but the precious metal was not far from its record high above $1,900 an ounce.

U.S. and German government debt, perceived as safer assets amid the turmoil, rallied and pushed benchmark yields to historic lows. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Insider show, click on:

http://link.reuters.com/bab63s

BREAKINGVIEWS column: [nL5E7K61GT]

Graphic on move in EURCHF: http://link.reuters.com/mab63s

Gold correlation with dollar: http://r.reuters.com/ryx52s

Inflation adjusted gold price: http://r.reuters.com/pun62s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The pan-European FTSEurofirst 300 <.FTEU3> was down 0.7 percent after falling more than 4 percent on Monday on renewed worries about Europe's ability to solve its debt problems.

U.S. and European equities briefly pared their losses after a report showed that growth in the U.S. services sector unexpectedly improved in August. [ID:nN1E7850QA]

This snapshot soothed some worries that the world's biggest economy is on the brink of recession, but not enough to scale back expectations the Federal Reserve would engage in another round of monetary stimulus to boost sluggish U.S. growth.

"When something like Europe is dominating, we would have to have a giant surprise to change the tone. Bears are running the Street right now," said Todd Schoenberger, managing director with LandColt Trading at Lewes, Delaware.

World stocks as measured by MSCI <.MIWD00000PUS> fell 1.6 percent, while Japan's Nikkei <.N225> closed off 2.2 percent.

After the Swiss National Bank announcement, the euro was trading at just above the central bank's new target of 1.20 Swiss francs after being at around 1.10 francs. It fell to a record low 1.0075 on Aug. 9. [ID:nL5E7K61FL]

The euro touched an eight-week low against the dollar, last trading at $1.4001 .

Ten-year German and U.S. government debt yields stayed near historic lows, well below 2 percent, signaling that the intensive search for safety was continuing. [US/]

The Swiss central bank's move rocked a number of other assets, notably gold . It lost some allure to trade at $1,903 an ounce after touching a record high at $1,920.

In the oil market, U.S. crude futures for October delivery were down $2.08 at $84.35 a barrel after touching a session low of $83.20. [O/R] (Reporting by Chuck Mikolajczak, Chris Reese, Nick Olivari and Gene Ramos in New York and Amanda Cooper and Jan Harvey in London; Editing by James Dalgleish)