* S&P down over 20 pct from high
* U.S. crude oil reaches 2011 low as aid to Greece delayed
* U.S. dollar falls vs euro
* Bernanke says Fed ready to act (Updates with closing oil prices)
By Walter Brandimarte
NEW YORK, Oct 4 (Reuters) - U.S. stocks slid into bear market territory on Tuesday, and prices of U.S. crude oil fell to a one-year low, driven by fears of another global recession as Greece appeared increasingly likely to default.
The S&P 500 Index <.SPX>, a broad measure of the U.S. stock market, was down more than 20 percent from its 2011 high, marking a bear market threshold that, for many investors, is a sign stock losses may be sustained.
Federal Reserve Chairman Ben Bernanke provided some comfort, saying in congressional testimony that the U.S. central bank was ready to act further to support the economy. For details, see [ID:nN1E7930IZ]
His statement, some investors said, left the door open to another round of quantitative easing policies, which reduced the safe-haven appeal of U.S. government bonds and the dollar, allowing the euro to rally against the greenback.
"The stock market declines show increased worry about recession, but we still see some signs that the economy is growing and not contracting," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri.
"The markets are worried. Investors are uncertain about what's happening in Europe, and until we see some of that uncertainty cleared up, we are likely to have highly volatile markets," he added.
Greece appeared more likely to default on its debt after euro zone finance ministers postponed a vital aid payment to Athens until mid-November. [ID:nL5E7L419D]
The impact of a possible default on the global economy and particularly on the banking sector worried markets after European Union ministers said they were reviewing the size of private-sector involvement in a second bailout package for Greece.
The three major U.S. stock indexes had fallen more than 2 percent earlier in the day, but trimmed losses after Bernanke's speech.
The Dow Jones industrial average <.DJI> was down 160.44 points, or 1.51 percent, at 10,494.86, while the Standard & Poor's 500 Index <.SPX> dropped 12.41 points, or 1.13 percent, to 1,086.82. The Nasdaq Composite Index <.IXIC> fell 15.38 points, or 0.66 percent, at 2,320.45.
Morgan Stanley
World stocks hit a 15-month low, with the MSCI All-Country World index <.MIWD00000PUS> sliding 2.2 percent.
OIL HITS ONE-YEAR LOW, EURO GAINS
U.S. crude oil prices
The euro
"This is just a correction in a euro bear market," said Jay Meisler, co-founder of Global-View.com in Huntington, New York.
"Part of the rally could be traced to Trichet as well," he added, in reference to the president of the European Central Bank, Jean-Claude Trichet. "He could have signaled a rate cut today, but he did not. So you've got to go on the assumption that the ECB is not going to cut rates this week."
The ECB's policymakers are to meet on Thursday. There have been expectations in markets that the ECB would raise rates on Thursday.
In the government debt market, longer-dated Treasuries led the losses, with 30-year bonds