NEW YORK (Reuters) - U.S. stocks recovered from early losses to end slightly lower on Tuesday while European shares plunged for a second straight day on fears of slowing global growth, with particular concern over the health of the banking sector.

The benchmark U.S. S&P 500 .SPX erased most losses after falling as much as 1 percent, with gains in health care and materials shares offsetting declines in energy stocks. Shares of U.S. banks stumbled before paring losses, with the S&P financial index .SPSY ending just 0.16 percent lower.

The S&P energy index .SPNY closed down 2.47 percent and stood out as the day's weakest sector after Brent crude settled 7.8 percent lower on the day. The volatile session came after all three major U.S. indexes lost more than 1 percent on Monday.

The European banking index .SX7P ended 4 percent lower after sinking 5.6 percent on Monday on fears of worsening bank profitability and capital strength from sustained low interest rates.

“There may be some hope there that (Federal Reserve Chair Janet Yellen) is going to say something to buoy the markets,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Yellen will address Congress on Wednesday.

MSCI’s all-country world equity index, which tracks shares in 45 nations, was last down 2.38 points or 0.66 percent, at 358.43.

The Dow Jones industrial average .DJI ended down 12.67 points, or 0.08 percent, at 16,014.38. The S&P 500 .SPX closed down 1.23 points, or 0.07 percent, at 1,852.21. The Nasdaq Composite .IXIC ended down 14.99 points, or 0.35 percent, at 4,268.76.

The FTSEurofirst 300 index .FTEU3 ended down 1.6 percent at 1,219.82. The index hit its lowest level since September 2013 earlier in the day.

Benchmark Brent crude prices fell to their lowest in two weeks and U.S. crude prices dropped below $28 a barrel to their lowest in just under three weeks. Forecasts for more growth in U.S. crude stockpiles and weak demand forecasts contributed to the plunge.

Brent crude LCOc1 settled down $2.56, or 7.8 percent, at $30.32 a barrel. U.S. crude CLc1 settled down $1.75, or 5.9 percent, at $27.94 a barrel.

Yields on benchmark 10-year Treasury notes US10YT=RR, sought for their relative safety, extended Monday's declines to hit 1.682 percent, the lowest in a year.

“The mood in the market is very much ‘sell today, ask questions later’ which is a boost for Treasuries and that flight to safety is led by fear,” said Gennadiy Goldberg, interest rate strategist at TD Securities in New York.

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Spot gold XAU=, another safe-haven asset, rose in price to just below the 7 1/2-month high struck the previous day.

The U.S. dollar extended Monday's drop against the safe-haven Japanese yen, hitting its lowest against the yen since November 2014 of 114.205 yen. The Mexican peso MXN= hit an all-time low against the dollar.

U.S. gold for April delivery GCJ6 settled up 70 cents at $1,198.60 an ounce.