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DJI-NEW YORK, Oct 3 (Reuters) - U.S. stocks slumped in heavy volume to a 13-month low on Monday as investors dumped bank shares on fears that Greece's worsening financial crisis could cause a large European lender to fail.

Investors pegged losses to the sharp fall in Franco-Belgian financial group Dexia , which fell 10 percent after a Moody's warning about its liquidity due to concerns about exposure to Greece.

Markets have feared European officials will be unable to prevent Greece's fiscal crisis from turning into a global banking crisis. Greece said it will miss its deficit targets this year and next, which could limit the country's ability to receive more aid.

The Dow Jones industrial average <.DJI> dropped 258.08 points, or 2.36 percent, to 10,655.30. The S&P 500 <.SPX> fell 32.19 points, or 2.85 percent, to 1,099.23. The Nasdaq Composite <.IXIC> lost 79.57 points, or 3.29 percent, to 2,335.83.

NYMEX-NEW YORK, Oct 3 (Reuters) - U.S. crude oil futures fell
more than 2 percent on Monday to the lowest settlement in 12 months, as fears that Greece might default on its debt outweighed positive U.S. economic data on manufacturing, construction and new vehicle sales.

Crude futures extended losses for a second day after dropping 17 percent for the third quarter, which ended on Friday, the worst performance for U.S. crude since the fourth quarter of 2008, at the height of the financial crisis.

On the New York Mercantile Exchange, crude for November delivery dropped for a second straight day and settled at $77.61 a barrel, falling $1.59, or 2.01 percent, after trading from $76.85 to $79.64. It was the lowest settlement for front-month crude since Sept. 28, 2010, when prices ended at $76.18.

CBOT-SOYBEANS-Soybean futures at the Chicago Board of Trade fell,
extending Friday's sell-off, as a firm dollar prompted more fund
long liquidation, traders said.

Selling also was triggered by forecasts for beneficial harvest weather in the U.S. Midwest, traders said.

FCPO-KUALA LUMPUR, Oct 3 (Reuters) - Malaysian palm oil futures tumbled to one-year lows on Monday on concerns that the euro zone's deepening debt crisis will stall global economic growth and commodity demand.

Palm oil prices, which have lost more than a quarter so far this year, took another hit after funds liquidated their positions in global grains and vegetable oil markets to close up third-quarter books.

Benchmark December palm oil futures <0#FCPO:> on the Bursa Malaysia Derivatives Exchange fell as much as 2.7 percent to 2,827 ringgit ($885.51) a tonne, the lowest since Oct. 8 last year. The contract later settled at 2,845 ringgit. Overall traded volumes stood at 25,008 lots of 25 tonnes each.

REGIONAL EQUITIES-BANGKOK, Oct 3 (Reuters) - Stocks in Indonesia and Thailand tumbled more than 5 percent on Monday, leading the rest of Southeast Asia lower as commodity-related shares were hit by fears about the global economy as the euro zone debt crisis dragged on.

Local currencies weakened as offshore funds cut exposure to the region. The unresolved problems in Europe plus the risk of recession in the United States made investors wary of returning to riskier assets.

World stocks also kicked off the final quarter of the year sharply lower as concern grew that a broad Greek debt default may be in the works after figures showed Athens would miss a deficit target.

By 0923 GMT, the MSCI world equity index <.MIWD00000PUS> was down 1.26 percent while the MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> had dropped 3.5 percent.

Commodities-related shares led losers amid a weak outlook
or demand and prices. Thailand's top energy firm, PTT , sank 6.2 percent to the lowest in more than a year.

Malaysia's Petronas Chemicals dropped 1.4 percent and Indonesian coal miner Adaro Energy slid 6.4 percent.