NEW YORK (Reuters) - World stock markets tumbled and Brent oil prices remained under pressure on Thursday as another slump in the equity market of China, the world’s No. 2 economy, stoked concerns about sluggish global growth.

Traders work on the floor of the New York Stock Exchange August 20, 2015. REUTERS/Brendan McDermid

Wall Street was also weighed down by a drop in finance stocks and fell for a third straight session as expectations cooled for a U.S. interest rate hike in September, which also kept the dollar lower.

The declines in equities put the S&P 500 back into negative territory for the year. The Nasdaq suffered its biggest daily percentage drop since April 10, 2014.

Stocks in China tumbled again, with both the Shanghai and Shenzhen markets .SSEC.CSI300 down more than 3 percent.

Investors have been concerned a weak currency and slowing economy may spur further capital outflows.

“The largest issue is certainly the fact that we don’t know how much the Chinese economy is slowing,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

FINANCIALS HIT

In a broad selloff on Wall Street, in which each of the 10 major S&P sectors lost ground, financials .SPSY dropped 2.1 percent. The drop comes in the wake of minutes released Wednesday from the Federal Reserve's July meeting, which cooled expectations the Fed will start to raise interest rates as early as September, the first such move in nearly a decade.

A 6-percent drop in Disney DIS.N to $100.20 also weighed heavily. Bernstein downgraded the stock along with Time Warner TWX.N, down 5 percent to $73.91, to lead media stocks lower, citing massive structural upheaval in the industry.

The Dow Jones industrial average .DJI fell 358.04 points, or 2.06 percent, to 16,990.69, the S&P 500 .SPX lost 43.88 points, or 2.11 percent, to 2,035.73 and the Nasdaq Composite .IXIC dropped 141.56 points, or 2.82 percent, to 4,877.49.

MSCI's all-country world stock index .MIWD00000PUS lost 1.5 percent after touching a 7-month low.

The Fed minutes showed officials in broad agreement that the U.S. economy was nearing the point where interest rates should move higher. It also noted lagging inflation and that a weak global economy posed too big a risk to commit to a rate “liftoff.”

BROAD DECLINES

The FTSEuroFirst index of 300 leading European shares fell 1.9 percent .FTEU3 and Germany's DAX fell 2.1 percent .GDAXI to its lowest close since January. That put the DAX down about 7.8 percent so far this month, its worst month in four years.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 1.5 percent to a two-year low, marking a fifth consecutive day of losses in what is its longest losing streak this year.

Benchmark 10-year notes US10YT=RR were last up 16/32 in price to yield 2.0731 percent from 2.50 percent in mid-June.

The dollar .DXY shed 0.61 percent to 96.028 against a basket of major currencies amid the diminished rate hike expectations, touching a 5-week low of 95.724.

U.S. crude oil CLc1 managing to bounce off its support level near $40 a barrel and from a 6-1/2 year low of $40.21 as the first hurricane of the 2015 Atlantic season sparked some concern. The contract settled up 0.8 percent at $41.14, while Brent crude settled down 1.2 percent at $46.62.

MSCI's emerging market index .MSCIEF set a near four-year low, having fallen 22 percent from this year's high hit in April.

Kazakhstan fired the latest salvo in an emerging market currency war, ditching a trading band on its currency, the tenge, which lost a quarter of its value.