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GLOBAL MARKETS-ECB action sends stocks lower as dollar strengthens

* MSCI world index down for 4th day, longest run since Dec

ECB announces funding handouts, pushes back rate hike

* S&P 500 hits three-week low on growth worries (Updates with close of European markets)

By Chuck Mikolajczak

NEW YORK, March 7 (Reuters) - A gauge of global stock markets retreated on Thursday while the U.S. dollar rose, as the European Central Bank postponed interest rate hikes to 2020 and launched a fresh round of cheap loans to banks in an effort to rejuvenate the euro zone economy.

Equities had drifted lower over the past several sessions before the session's sharp drop, sparked by the ECB's change of direction just months after it wound down its massive quantitative easing program.

The ECB's move puts it in sync with other central banks around the world that have been taking a dovish tack, including the Bank of Canada earlier this week. The ECB also cut its growth and inflation estimates for 2019 as well as those for 2020 and 2021, raising alarm bells for investors once again over global growth.

"What they are acknowledging is that there is this huge slowing of growth that we have all seen," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia.

"They are scared. They are kind of keeping a smiling face on that they have the tools and can deal with it, but they are trying to stave off a growth decline."

The growth concerns weighed on banking shares in the United States, which helped push the benchmark S&P 500 index to its lowest level since Feb. 14.

The Dow Jones Industrial Average fell 195.79 points, or 0.76 percent, to 25,477.67, the S&P 500 lost 21.6 points, or 0.78 percent, to 2,749.85 and the Nasdaq Composite dropped 78.08 points, or 1.04 percent, to 7,427.84.

MSCI's gauge of stocks across the globe shed 0.92 percent. MSCI's index was below its 200-day moving average for the first time since mid-February and on track for its fourth straight day of losses, the longest streak this year.

Stocks in Europe were whipsawed by the ECB action, falling from five-month highs and closing lower as European banks tumbled more than 3 percent.

The pan-European STOXX 600 index lost 0.43 percent.

The euro weakened to a low of 1.1204, its lowest since June 2017, and the dollar rose against a basket of major currencies after the ECB announcement.

The dollar index rose 0.65 percent, with the euro down 0.83 percent to $1.1211.

The global growth worries overshadowed generally solid economic data on the U.S. labor market and worker productivity. Non-farm payrolls data will be released on Friday.

The ECB move also sent prices on U.S. Treasury bonds higher, with 10-year yields hitting their lowest in a week.

Benchmark 10-year notes last rose 14/32 in price to yield 2.6411 percent, from 2.692 percent late on Wednesday.

Oil prices were higher as OPEC-led supply cuts and U.S. sanctions against exporters Venezuela and Iran counteracted record U.S. crude output and growth worries.

U.S. crude rose 0.69 percent to $56.61 per barrel and Brent was last at $66.25, up 0.39 percent on the day.

(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Lisa Shumaker)