(Reuters) - U.S. bank stocks slumped on Monday as fears of a recession sent investors fleeing from a sector closely tied to the health of the economy and toward safe-haven assets.

Citigroup ( C/PN ) led big bank losses with a 6% fall. Wells Fargo ( WFC ), Bank of America ( BAC ) and Goldman Sachs ( GS ) fell about 4% each, while JPMorgan Chase ( JPM ) and Morgan Stanley ( MS ) declined 2.5% and 3.5%, respectively.

Lenders are highly susceptible to an economic downturn as recessions heighten concerns over credit losses due to higher unemployment, while loan demand - a key factor in profitability - also takes a beating.

Investors have been increasingly jittery since a crisis of confidence hit the sector last year, in part due to higher interest rates, and took down three major regional players.

Customers Bancorp's shares fell nearly 7%, while Banc of California ( BANC ), Citizens Financial, and US Bancorp ( USB ) fell between 3.5% and 4.5%.

The S&P 500 Banks Index, tracking a basket of large-cap bank stocks, was last down 3.3%, while the KBW Regional Banking Index fell 4%.

The U.S. unemployment rate jumped to a near three-year high of 4.3% in July amid a significant slowdown in hiring, heightening fears the labor market was deteriorating and potentially making the economy vulnerable to a recession.

The employment report, which also showed the increase in annual wages last month was the smallest in more than three years, prompted some Wall Street institutions, including Bank of America Securities, to pull forward their rate cut expectations to September from December.

The S&P 500 Banks Index is down 7.2% month-to-date vs a 3.2% decline in the benchmark S&P 500, as of last close. The KBW Regional Banking Index has lost 7.6% over the same period.

(Reporting by Manya Saini in Bengaluru; Editing by Sriraj Kalluvila)