GLOBAL MARKETS-Global stocks slide as investors remain cautious

(Updates through late afternoon trading)

NEW YORK, Oct 29 (Reuters) - An early gain on Wall Street fizzled and sent global stocks lower on Monday as investors remained cautious despite IBM's $34 billion deal to purchase Red Hat Inc and Standard & Poor's decision to keep Italy's credit rating unchanged.

In late afternoon trading, The Dow Jones Industrial Average fell 319.63 points, or 1.29 percent, to 24,368.68, the S&P 500 lost 26.06 points, or 0.98 percent, to 2,632.63 and the Nasdaq Composite dropped 145.70 points, or 2.03 percent, to 7,021.52.7,021.52.

The Dow had shot up more than 300 points shortly after the opening of trade.

Many stock indexes are already in official correction territory as investors fret about corporate earnings and global economic growth.

"With the volatility of the last week or so, today's stronger open to markets should not be seen as a sea change but more a pause for breath," said Edward Park, investment director at Brooks Macdonald.

Shares in Europe rose broadly following Standard & Poor's decision to leave Italy's sovereign rating unchanged, prompting relief there was no ratings downgrade.

The MSCI world equity index lost early gains to slide 0.6 percent. The index is down nearly 10 percent so far this month and has shed $6.7 trillion in market value since its January peak.

Europe's autos sector jumped 4.9 percent, its strongest day since August 2015, after a report that China was considering halving the tax on car purchases to boost demand for autos, which has suffered from a trade war and slowing economic growth.

Asian stock trading was dampened by Chinas blue-chip index which tumbled more than 3.3 percent. Chinese data underscored worries of a cooling economy as profit growth at industrial firms slowed for the fifth consecutive month in September due to ebbing sales of raw materials and manufactured goods.

Analysts have been downgrading estimates for European earnings at the fastest pace since February 2016, and weak results from internet companies Amazon.com Inc and Alphabet Inc hurt U.S. stocks at the end of last week.

"The only way I can summarize the core sentiment among the European investors I met is something like 'pretty grim'," wrote Erik Nielsen, group chief economist at UniCredit, in a note to clients.

Benchmark 10-year notes last fell 1/32 in price to yield 3.0793 percent, from 3.076 percent late on Friday.

U.S. crude fell 1.42 percent to $66.63 per barrel and Brent was last at $76.89, down 0.94 percent on the day.

(Reporting by David Randall Editing by Susan Thomas and David Gregorio)