* U.S. factory data much weaker than expected
* VIX trades above 20 for first time since October
* Chinese data adds to concern about emerging markets
* Indexes down: Dow 0.9 pct, S&P 1 pct, Nasdaq 1.2 pct
NEW YORK, Feb 3 (Reuters) - U.S. stocks fell on Monday, adding to recent losses after data showed the factory sector in the world's largest economy expanded in January at its slowest pace in eight months.
U.S. manufacturing grew at a slower pace in January as new order growth plunged by the most in 33 years.
Investor sentiment soured sharply after the data, driving the cost of protection against a drop on the S&P to its highest level in nearly four months. The CBOE volatility index jumped more than 9 percent to trade above 20 for the first time since early October.
"The data was very weak across the board. It's hard to find any good news in there. It looks like a general slowdown, though you don't know how much of this is weather related," said Paul Zemsky, head of asset allocation at ING Investment Management in New York.
"Combine that with the fact emerging market currencies continue to sell off, and things don't look too good for the market now," he said. "Somewhere between now and 1,700 (on the S&P) there's a big buying opportunity, but people need to see some stability in emerging currencies."
The Dow Jones industrial average fell 140 points or 0.89 percent, to 15,558.85, the S&P 500 lost 17.06 points or 0.96 percent, to 1,765.53 and the Nasdaq Composite dropped 48.376 points or 1.18 percent, to 4,055.501.
Stocks were pressured late last month by concern about growth in China and as the Federal Reserve confirmed its commitment to withdrawing its market-friendly stimulus. China's service-sector growth slowed down to a five-year low in another sign of its stuttering economic momentum.
For January, the Dow tumbled 5.3 percent and the S&P 500 slid 3.6 percent - their worst monthly percentage declines since May 2012.
Investors were wary about the outlook for emerging markets, where a recent rout in currencies spurred some central banks to raise interest rates or intervene in markets to limit the swings, in turn pressuring bond and stock holdings and forcing investors to exit in favor of assets perceived as relatively safe like the yen.
On Monday, Japan's Nikkei share average fell to a fresh 2-1/2 month low and entered correction territory, down more than 10 percent from a high hit Dec. 30.
Charter Communications Inc is discussing raising its bid for Time Warner Cable Inc as soon as in the next two weeks, according to people familiar with the matter, a move that could pressure its reluctant rival ahead of a proxy deadline. TWC shares rose 1.1 percent to $134.67.
Britain's Smith & Nephew is to buy ArthroCare Corp for $1.7 billion in cash to strengthen its treatments for sports injuries, an area growing faster than its main replacement hips and knees business. ArthroCare shares rose 6.9 percent to $48.53.
Companies scheduled to report quarterly results on Monday include Principal Financial Group, Yum! Brands and Anadarko Petroleum.