The fear trade came roaring back yesterday.

Global equity markets sold off as investors piled into US Treasury notes looking for a safe place to park cash while revolutions continue to fester in north Africa and Arab Gulf states.

Unrest continued in Libya, with global oil prices soaring on reports that strongman Moammar Khadafy ordered the destruction of crude pipelines servicing Mediterranean Sea ports, taking 1.8 million barrels a day off the crude market.

In domestic markets, Bank of America slid 3.9 percent on news it will double writedowns on losses to its credit card business to $20.3 billion.

Other Wall Street banks suffered losses on speculation they may have exposure to managing funds for the $32 billion Libyan Sovereign Wealth Fund, which could be in jeopardy should Khadafy be overthrown.

After ignoring the Middle East fallout since January, stocks suffered their worst sell-off in weeks. The Dow Jones industrial average fell 1.44 percent, or 178.46, to 12,212.79.

Hardest hit was the Nasdaq, down 2.74 percent to 2,756.42, off 77.53, while the S&P 500 index dropped 2.05 percent to 1,315.44.

“There’s so much new nervousness over the unrest that people are becoming afraid to hold overnight positions,” said funds chief Peter Cohan of Peter S. Cohan Associates.

Oil here has spiked for two straight sessions to rise 8.6 percent since Friday’s close, settling at $95.42 for April’s contract.

Gasoline surged 7.36 cents, or 2.9 percent, to $2.6249 a gallon wholesale.

“If oil hits $110 a barrel, it’s going to drain a half-percent from GDP,” said economist Michael Pento of Euro Pacific Capital, adding it likely would trigger extended bond-market intervention all year by the Federal Reserve.

Cohan said the new gloom could spoil hopes for economic growth.

“It could take the optimistic forecast that’s developing for GDP in 2011 and knock it down,” Cohan said.

Indeed, a rosy outlook released yesterday by the Conference Board — compiled prior to riots abroad — said US economic optimism’s gain in February made it the best February in 12 years, with expectations at a five-year high. tharp@nypost.com