GLOBAL MARKETS-Stocks selloff goes on; Trump warns of more China tariffs if it doesn't back off

Updates with latest Trump comments on tariffs

By Caroline Valetkevitch

NEW YORK, April 7 (Reuters) - Major stock indexes fell again in volatile trading on Monday as U.S. President Donald Trump said he will impose an additional 50% tariff on China if Beijing does not withdraw its retaliatory tariffs on the United States, while the dollar and bond yields rose.

Also, the White House denied a report that Trump is considering a 90-day pause in tariffs for all countries except China. The report, which the White House said was "fake news," briefly turned U.S. stocks positive earlier.

But markets have been turbulent amid the changing headlines, and U.S. stocks remained well off their lows of the day.

"You can tell shorts are on a hair trigger today, watching around every corner for a possible Fed intervention, tariff pause, or trade deal. It goes to show you just how short-lived this market rout is likely to be," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.

Traders bet the increasing risk of recession could result in the Federal Reserve cutting interest rates as early as May. Futures markets moved to price in almost five quarter-point cuts in U.S. rates this year.

Stocks fell sharply at the opening, and the S&P 500 had been on pace to confirm a bear market amid concern Trump was showing no sign of backing away from his sweeping tariff plans. Stocks sold off sharply last week following the tariff announcement.

The Dow Jones Industrial Average .DJI fell 629.33 points, or 1.64%, to 37,685.53, the S&P 500 .SPX dropped 56.14 points, or 1.14%, to 5,016.43 and the Nasdaq Composite .IXIC fell 129.97 points, or 0.88%, to 15,450.15.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 23.61 points, or 3.09%, to 740.68.

The pain also engulfed European stocks, with recent market darlings such as defense shares particularly hurt as investors were forced to sell. .EU The pan-European STOXX 600 .STOXX index fell 4.54%.

In Asia, Hong Kong's Hang Seng's .HSI 13% one-day slump was the largest since 1997, while in mainland China the blue-chip CSI 300 .CSI300 index was down 7%, only finding a floor when state media reported China's sovereign fund Central Huijin was a buyer. .SS

Treasury yields rose. Benchmark 10-year note yields US10YT=RR were last up 12.8 basis points on the day at 4.119%. They fell to 3.86% on Friday, the lowest since October 4.

Interest-rate sensitive two-year yields US2YT=RR rose 2.9 basis points to 3.699%. They earlier reached 3.435%, the lowest since September 2022.

The dollar also gained, while a gloomier growth outlook kept oil prices down.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.81% to 103.43, with the euro EUR= down 0.37% at $1.0914. Against the Japanese yen JPY=, the dollar strengthened 0.69% to 147.92.

U.S. crude CLc1 fell 1.84% to $60.84 a barrel and Brent LCOc1 fell to $64.41 per barrel, down 1.78% on the day.

(Additional reporting by Alun John in London and Saeed Azhar in New York; Editing by Kim Coghill, Himani Sarkar, Shri Navaratnam, Hugh Lawson, Nick Zieminski and Richard Chang)

((caroline.valetkevitch@thomsonreuters.com))

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