Stocks extend slide, yen up as Sino-U.S. trade dispute escalates

By Shinichi Saoshiro

TOKYO (Reuters) - Asian stocks extended a global downturn on Tuesday, while the safe-haven yen rose as U.S. President Donald Trump threatened new tariffs on Chinese goods in an escalating tit-for-tat trade war between the world's two biggest economies that has rattled financial markets.

Trump warned on Monday that Washington would impose a 10 percent tariff on $200 billion of Chinese goods after Beijing's decision to raise tariffs on $50 billion in U.S. goods. Trump said if China increases its tariffs again in response to the latest U.S. move, "we will meet that action by pursuing additional tariffs on another $200 billion of goods."

 

The retaliatory moves come after Trump said last week he was pushing ahead with tariffs on $50 billion of Chinese imports.

The trade frictions have kept financial markets on edge, with investors increasingly worried that a full-blown trade conflict could derail global growth.

S&P 500 futures were off 0.6 percent, pointing to a another down day for Wall Street shares which slipped on Monday.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> dipped 0.1 percent.

Japan's Nikkei <.N225> lost 0.45 percent, South Korea's KOSPI <.KS11> edged down 0.1 percent while Australian stocks <.AXJO> added 0.3 percent.

The dollar fell 0.45 percent to 110.06 yen > following Trump's tariff comments. The yen is often sought in times of market turmoil and political tensions.

"The financial markets are trying to gain a breather after last week, when there were many news events, but U.S.-China trade remains a lingering theme, at least until the U.S. tariffs take effect early in July," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

"While trade tensions are not a positive theme, the market has become accustomed to President Trump's comments, which appear to be negotiating tactics."

The euro was 0.05 percent higher at $1.1631 >. The Australian dollar >, often seen as a proxy to China-related trades, shed 0.25 percent to $0.7404.

In commodities, crude oil markets remained volatile ahead of Friday's OPEC meeting at a time when Russia and Saudi Arabia are pushing for higher output.

Brent crude futures fell 0.3 percent to $75.11 a barrel after rallying 2.5 percent overnight.

(Editing by Shri Navaratnam)