* Crude falls, weighs on energy
* Financial lead declines
* Indexes down: Dow 1.1 pct, S&P 1.3 pct, Nasdaq 1.5 pct (Updates to late afternoon)
By Caroline Valetkevitch
April 7 (Reuters) - U.S. stocks dropped Thursday as oil prices slid and worries about the global economy resurfaced, putting pressure on the dollar as investors fled riskier assets and sought safety in the yen and gold.
"There's concern about a global slowdown," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
"I think what we're seeing is the market believes that these (global central bank) policies and discussions on negative rates have diminishing returns at this point and are creating more harm than good, more uncertainty."
Minutes from the Fed's March meeting released on Wednesday pointed to concerns about the central bank's limited ability to tackle a global economic slowdown, reducing the odds of a rate increase before June.
While the Fed has projected two rate increases this year, the market is pricing in a near 60-percent chance of a hike in December, according to CME Group's FedWatch Program.
At 3:11 p.m., the Dow Jones industrial average was down 190.42 points, or 1.07 percent, to 17,525.63, the S&P 500 lost 27.26 points, or 1.32 percent, to 2,039.4 and the Nasdaq Composite dropped 74.71 points, or 1.52 percent, to 4,846.01.
Financials were the biggest drag on the S&P 500, with the S&P sector down 2.1 percent.
Crude fell as a rise in Iraqi exports offset gains from an unexpected fall in U.S. inventories. The S&P energy index was down 1.4 percent.
Adding to investor caution, first-quarter earnings kick into high gear next week, with a 7.4-percent year-over-year decline projected for S&P 500 companies, according to Thomson Reuters data.
Some strategists argue the severity of the drop in forecasts could result in more positive profit surprises, which would be a positive for the market.
Verizon Communications Inc shares were down 3 percent at $51.89 after Bloomberg, citing people familiar with the matter, reported Verizon plans to make a first-round bid for Yahoo Inc's web business next week. Yahoo was down 0.8 percent at $36.36.
Declining issues outnumbered advancing ones on the NYSE by 2,408 to 591, for a 4.07-to-1 ratio on the downside; on the Nasdaq, 2,046 issues fell and 731 advanced for a 2.80-to-1 ratio favoring decliners.
The S&P 500 posted 7 new 52-week highs and 1 new lows; the Nasdaq recorded 21 new highs and 21 new lows. (Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D'Silva and Nick Zieminski)