* Euro dips below $1.30, down for seventh day
* Brent, U.S. oil prices fall for fifth session
* Benchmark German yields hit record low
* Greek stock index hits near 20-year low
NEW YORK, May 8 (Reuters) - The euro, oil and stocks fell on T uesday as Greece's political crisis intensified after a call to form a new government renounced the terms of a bailout that is keeping the country's finances afloat.
The results of weekend elections in Greece and France, in which voters soundly rejected harsh austerity measures seen by markets as a way out of the debt crisis, heightened the uncertainty of the path ahead for the euro zone.
Alexis Tsipras, the leader of the Greece's Left Coalition party, began efforts to form a government by renouncing the EU/IMF bailout terms and threatening to nationalize banks.
The head of a centrist conservative party, which won the most votes Sunday, said he would not back a minority government that rejected the bailout, making repeat elections in a few weeks increasingly likely.
If Greece does not stick to the aid package terms, it could run out of money as soon as next month, officials estimate.
A broad measure of Greek stocks dropped 3.6 percent to close at its lowest in almost 20 years and France's CAC 40 lost 2.8 percent. Wall Street's benchmark S&P 500 hit a two-month low.
The uncertainty in Europe put a bid under safe-haven assets, sending benchmark German yields to a record low of 1.533 percent. The increased aversion to risk also underpinned demand at a sale of Dutch and Austrian bonds.
The benchmark 10-year U.S. Treasury note was up 13/32, the yield at 1.828 percent. Yields briefly dipped below 1.82 percent, their lowest since early February, but the slide was seen as temporary.
"Unless Europe deteriorates further from here these yields are going to prove to be unsustainably low," said Jim Kochan, chief fixed-income strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. Wells Fargo Advantage Funds has $208 billion in assets under management.
COMMODITIES SLIDE WITH EURO
Oil prices fell for a fifth straight session on the prospect of weaker growth on both sides of the Atlantic at a time of ample supply from major oil producers.
Brent crude fell 1.6 percent, below $112 a barrel, and U.S. crude lost 2 percent to trade near $96.
The euro was down 0.4 percent at $1.3009, off the day's low of $1.2981. The single currency traded below the key technical level of $1.30 for a second straight session.
"Today's euro weakness is overwhelmingly tied to Greece's difficulty putting together a government," said Daniel Hwang, senior currency strategist at Forex.com in New York.
"It is an overall risk off day, however, and the euro will likely remain under pressure due to all the political uncertainty."
Gold traded below $1,600 an ounce for the first time in four months, continuing its close correlation with the euro. Spot gold was down 2.1 percent at $1,602.76.
In afternoon trading in New York, the Dow Jones industrial average dropped 161.59 points, or 1.24 percent, at 12,846.94. The Standard & Poor's 500 Index was down 17.96 points, or 1.31 percent, at 1,351.62. The Nasdaq Composite Index was down 48.43 points, or 1.64 percent, at 2,909.33.
The pan-European FTSEurofirst 300 closed down 1.7 percent and the blue-chip Euro STOXX 50 index slid 2.1 percent. Global stocks as measured by MSCI fell 1.3 percent.
"Greece is basically a zombie state right now," said Rick Fier, director of trading at Conifer Securities in New York.
It will be difficult for Greece to raise money to pay off its debt, whether or not it stays in the euro zone, Fier said. "If the euro zone is mired in recession for a while, that will put a crimp on (the U.S. economy) as we try to expand."
The political turmoil in Greece added to worries that France, where President-elect Francois Hollande has also opposed drastic spending cuts, could derail the German-led push for austerity in Europe and trigger a new phase of the bloc's debt crisis.
Italian benchmark yields rose 5 basis points to 5.63 percent while the Spanish benchmark added 9 basis points to 5.86 percent.
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