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US STOCKS-Wall St tumbles as weak factory data fuels slowdown worries

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* March U.S. manufacturing data misses estimates

* German manufacturing shrinks further

* U.S. Treasury curve inverts, weighs on financials

* Nike slips as North America sales fail to impress

Indexes fall: Dow 1.73 pct, S&P 1.85 pct, Nasdaq 2.24 pct (Updates to afternoon)

By Amy Caren Daniel

March 22 (Reuters) - Wall Street's main indexes tumbled about 2 percent on Friday after a raft of weak manufacturing data from the United States and Europe led to an inverted yield curve, stoking fears of an economic slowdown.

Manufacturers in Europe, Japan and the United States suffered in March as surveys showed trade tensions had impacted factory output, a setback for hopes the global economy might be turning the corner on its slowdown.

This led to the spread between three-month Treasury bills and 10-year note yields inverting for the first time since 2007. An inverted yield curve is widely understood to be a leading indicator of recession.

"Right now there are clearly enough signs to be cautious about a number of factors that can potentially cause an economic recession," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"It doesn't guarantee it," Frederick said, "but if multiple other pieces of data show the same thing then it just increases the chances."

Financial stocks took the biggest hit, tumbling 2.94 percent, the most among the 11 main S&P sectors. The banking sector plunged 4 percent.

The Federal Reserve earlier this week abandoned projections for any interest rate hikes this year, as policymakers see U.S. economy rapidly losing momentum.

Trade worries too added to the uncertainty. While U.S. trade delegates head to Beijing next week, President Donald Trump said a final agreement with China "will probably happen."

Chipmakers, which get a huge chunk of their revenue from China, fell. The Philadelphia chip index was down 2.29 percent, while the broader technology sector declined 1.64 percent.

At 12:44 p.m. ET the Dow Jones Industrial Average was down 449.97 points, or 1.73 percent, at 25,512.54. The S&P 500 was down 52.68 points, or 1.85 percent, at 2,802.20 and the Nasdaq Composite was down 175.96 points, or 2.24 percent, at 7,663.00.

The three main indexes were on track to wipe out gains for the week. This follows a strong run in the prior week, with the S&P 500 and the Nasdaq recording their biggest weekly rise of the year.

Only the defensive utilities, real estate and consumer staples sectors were trading higher.

Nike Inc dropped 5.5 percent after the sportswear maker's quarterly revenue failed to beat Wall Street estimates. Its partner Foot Locker Inc fell 4.4 percent

Declining issues outnumbered advancers for a 3.71-to-1 ratio on the NYSE and for a 5.47-to-1 ratio on the Nasdaq.

The S&P index recorded 54 new 52-week highs and five new lows, while the Nasdaq recorded 21 new highs and 63 new lows. (Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Anil D'Silva and Arun Koyyur)