* Commodities fall as China's cheaper yuan boosts U.S. dollar
* Materials shares lead decline; Apple drops
* Bond prices jump on China FX move, Fed rate speculation
* Indexes down: Dow 1.2 pct, S&P 1.0 pct, Nasdaq 1.3 pct (Recasts; updates close with latest volume, GE selling unit to Capital One, oil decline)
By Caroline Valetkevitch
Aug 11 (Reuters) - U.S. stocks declined broadly on Tuesday as China's devaluation of its yuan currency hit companies with a big exposure to the world's No. 2 economy and added to worries about the global economic outlook.
Apple Inc shed 5.2 percent to end at $113.54 in its biggest daily percentage decline since January 2014, making the stock the biggest drag on all three major U.S. indexes. Jefferies also raised concerns about the demand for the iPhone, primarily in China.
Among other companies with big exposure to China, Caterpillar was down 2.6 percent at $78.04 and Yum Brands dropped 4.9 percent to $83.54. General Motors shares lost 3.5 percent to $30.83, though it said the devaluation of the yuan would have a "limited and manageable" impact on its business.
The Dow Jones industrial average fell 212.33 points, or 1.21 percent, to 17,402.84; the S&P 500 index lost 20.11 points, or 0.96 percent, to 2,084.07 and the Nasdaq Composite dropped 65.01 points, or 1.27 percent, to 5,036.79.
"Obviously, this devaluation seems to suggest there's a lot of weakness, and we're in thinly-traded markets right now," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
"To a certain extent, the stocks that have propped up the market this year have slowly fallen out of favor, so I think that you're seeing a little bit of a flight to safety."
The sudden currency adjustment by the world's top metals consumer pushed copper and aluminum to six-year lows, and the S&P materials index dropped 1.9 percent, leading S&P 500 sector declines. Freeport-McMoRan slid 12.3 percent to $10.22.
Crude oil futures in New York ended at a more than six-year low.
Meanwhile, U.S. Treasury debt prices jumped following the devaluation news.
China's yuan currency fell to its lowest against the dollar in three years following what the country's central bank described as a "one-off depreciation."
Shares of Chinese e-commerce company Alibaba dropped 3.9 percent $77.34.
The day's stock market declines followed a rally on Monday that gave the S&P 500 its biggest increase since May.
Among the day's gainers, Google rose 4.1 percent to $690.30 after it said it would overhaul its operating structure.
After the bell, shares of General Electric edged up 0.4 percent after it said it would sell its U.S. healthcare finance unit and $8.5 billion of healthcare-related loans to Capital One Financial Corp. GE shares ended the regular session down 2 percent at $25.71.
Declining issues outnumbered advancing ones on the NYSE by 1,932 to 1,152, for a 1.68-to-1 ratio; on the Nasdaq, 1,967 issues fell and 848 advanced, for a 2.32-to-1 ratio favoring decliners.
The S&P 500 posted 10 new 52-week highs and 17 new lows; the Nasdaq recorded 40 new highs and 104 new lows.
About 7.1 billion shares changed hands on U.S. exchanges, compared with the 6.9 billion daily average for the month to date, according to data from BATS Global Markets. (Additional reporting by Sweta Singh in Bengaluru; editing by Savio D'Souza, Nick Zieminski and G Crosse)