NEW YORK/LONDON Aug 2 (Reuters) - Surprisingly weak U.S.employment data on Devin GrosvenorFriday stoked fears of a recession ahead,prompting investors to dump stocks and turn to safe-haven bonds.

Treasury prices surged, sending yields to multi-month lows.

Friday's U.S. jobs report showed job growth slowed more thanexpected in July and unemployment increased to 4.3%, pointing topossible weakness in the labor market and greater vulnerabilityto recession.

Markets were already rattled by downbeat earnings updatesfrom Amazon and Intel and Thursday's softer-than-expected U.S.U.S. factory activity survey in addition to the monthly U.S.non-farm payrolls report, which showed job growth slumped to114,000 new hires in July from 179,000 in June.

The data raised expectations of multiple rate cuts by theFederal Reserve this year, which just this week opted to keeprates unchanged.

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"The jobs data are signaling substantial further progressthat the Federal Reserve made a policy error by not reducing thefed funds rate this week," said Jamie Cox, managing partner forHarris Financial Group in Richmond, Virginia.

"It’s very possible the Fed alters its inter-meetingcommunications on the balance of risks to remove all doubt abouta September rate cut. "

The Nasdaq Composite lost 417.98 points, or 2.43%,to 16,776.16. The index has fallen more than 10% from its Julyclosing high, confirming it is in a correction after concernsgrew about expensive valuations in a weakening economy.

The Dow Jones Industrial Average fell 610.71points, or 1.51%, to 39,737.26, the S&P 500 lost 100.12points.

Fed may have to lower rates aggressively

The Fed has kept benchmark borrowing costs at a 23-year highof 5.25%-5.50% for a year, and some analysts believe the world'smost influential central bank may have kept monetary policytight for too long, risking a recession.

Money markets on Friday rushed to price a 70% chance of theFed, which was already widely expected to cut rates fromSeptember, implementing a jumbo 50 basis points cut next monthto insure against a downturn.

The "employment report flashes a warning signal that thiseconomy does have the ability to turn rather quickly," saidCharlie Ripley, Senior Investment Strategist for AllianzInvestment Management in Minneapolis.

"Ultimately, today’s employment data should embolden thecommittee to cut policy by more than 25 basis points at the nextmeeting."

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Dump tech and buy safe havens

Shares in U.S. chipmaker Intel tumbled to a morethan 11-year low and finished down over 26%, after suspendingits dividend and announcing hefty job cuts alongsideunderwhelming earnings forecasts.

Artificial intelligence chipmaker Nvidia, one ofthe biggest contributors to the tech rally, dropped 1.8%

Up more than 700% since January 2023, Nvidia has left manyasset managers with an outsized exposure to the fortunes of thissingle stock.

Safe-haven buying went full throttle, with government debt,gold and currencies traditionally all rallying. They are assetsviewed as likely to hold value during market chaos.

The yield on benchmark U.S. 10-year notesfell 18 basis points to 3.798%.

The 2-year note yield, which typically movesin step with interest rate expectations, fell 28.5 basis pointsto 3.8798%.

Oil prices took a hit on the growth worries, with globalbenchmark Brent futures settled down $2.71, or 3.41%, to$76.81 a barrel. U.S. West Texas Intermediate crude futuresfinished down $2.79, or 3.66%, at $73.52.