SINGAPORE, Aug 1 (Reuters) - Singapore's benchmark Straits Times Index fell more than 3 percent on Wednesday as investors sold bank and property stocks in the wake of Wall Street's tumble overnight.

By 2.03 pm local time, the Straits Times Index was down 3.59 percent at 3,420.15 points.

"Investors have underestimated the extent and depth of the U.S. subprime problems," said Leslie Phang, who oversees $1 billion at Commonwealth Private Bank in Singapore, told Bloomberg news. "Fears of a contagion are stoking risk aversion while higher energy prices diminish spending power."

The Straits Times Index dropped 101.14, or 2.9 percent, to 3,446.52 at the 12:30 p.m. local-time break, its biggest fall since April 19. None of the measure's 49 stocks rose today, while all nine industry groups on the broader Singapore All Equities Index slid. August futures slumped 3.7 percent to 417.8.

Singapore's United Overseas Bank , the country's second-largest lender, dropped 5.3 percent, and Oversea-Chinese Banking Corp. fell 5 percent.

CapitaLand , Southeast Asia's largest property developer, fell 2.7 percent.

Among other stocks, Singapore Telecom, the city-state's largest company by market value, fell 8 cents, or 2.3 percent, to S$3.42. Labroy Marine Ltd., a Singapore-based shipyard operator, slumped 16 cents, or 6.3 percent, to S$2.39, the biggest percentage decline on the benchmark. DBS Group Holdings Ltd., the nation's largest lender, fell 60 cents, or 2.6 percent, to S$22.50.

Government of Singapore Investment Corp., which manages more than $100 billion of the country's reserves, said U.S. subprime problems, higher crude oil prices and terrorism are among threats to financial markets, the Straits Times reported, citing Deputy Chairman Tony Tan.

U.S. stocks tumbled on Tuesday as worries about the deteriorating credit market resurfaced with news of another mortgage lending casualty.

U.S. stocks tumbled on Tuesday as worries about the deteriorating credit market resurfaced with news of another mortgage lending casualty.

Stocks had risen Monday and the first half of Tuesday's session, but the relief rally was cut short when American Home Mortgage Investment Corp. said it may have to liquidate assets. Shares of the mortgage lender fell 90 percent.

Investors remain sensitive to news about worsening lending conditions, which pummeled global equity markets last week. Credit market concerns pushed the S&P down 3.2 percent in July, its worst performance in three years.

In Tuesday's session, a jump in U.S. crude oil futures also unnerved investors after the September contract ended above $78 a barrel in New York in its highest settlement ever.

The relatively high quality of home loans that American Home held made investors skittish, said Sam Rahman, portfolio manager at Baring Asset Management Inc.

The Dow Jones industrial average slid 146.32 points, or 1.10 percent, to 13,211.99. For the month, the Dow was down 1.5 percent.

The Standard & Poor's 500 Index fell 18.64 points, or 1.26 percent, to 1,455.27. The Nasdaq Composite Index slumped 37.01 points, or 1.43 percent, to 2,546.27. For July, the Nasdaq was down 2.2 percent.

Declining stocks outnumbered advancing ones by a ratio of about 19 to 14 on the NYSE and by 3 to 2 on Nasdaq. - Reuters.