NEW YORK (Reuters) - Oil plunged 5 percent on Monday, crashing below technical support levels as the reduction of the top-tier U.S. credit rating hammered markets and stoked concerns of an economic slowdown. Brent crude broke below the 200-day moving average, extending a correction that has sent prices off more than 18 percent from 2011 peaks hit in April as traders weighed the prospect of a second recession on the already shaky oil demand outlook. Prices are down $13 a barrel since the start of August alone. "In the tumultuous aftermath of the U.S. downgrade from S&P, the world also is downgrading the oil market," said Phil Flynn, analyst at PFGBest Research in Chicago. Trading volumes spiked as the oil sell-off accelerated late in the day, triggered as stock markets tumbled in the first session since Standard & Poor's cut the AAA U.S. credit rating. The S&P 500 Index slid 6 percent in its biggest daily drop since December 1, 2008, while the Dow Jones industrial average lost 5.55 percent. Brent crude dropped $5.63 to settle at $103.74 a barrel, substantially below the 200-day moving average of $106.89 and down more than $23 from the 2011 peak over $127 a barrel hit in April. U.S. crude traded down $5.57 to settle at $81.31 a barrel, the lowest close since November 23. It then dropped as low as $80.17 a barrel in post-settlement activity, down $34 from the 2011 peak of $114 a barrel struck on May 2. "There is so much uncertainty and fear about a double-dip recession that it's hard to say we'll find any support at those levels," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut, who added he was watching for a break below $80 a barrel on U.S. crude.

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