* Global stocks gauge touches two-month low
* China's yuan weakest since late December
* China to slap tariffs on U.S. goods despite Trump warning
* U.S. Treasuries, yen benefit from safe-haven bid
* For Reuters Live Markets blog on European and UK stock markets, please click on: LIVE/
By Lewis Krauskopf
NEW YORK, May 13 (Reuters) - Global stock markets tumbled on Monday and the Chinese yuan weakened to its lowest level since December as the trade war between the United States and China escalated.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed 1.90%, its biggest one-day drop in more than five months as it touched a two-month low. Wall Street's main indexes tumbled more than 2%.
China said it would impose higher tariffs on a range of U.S. goods, striking back in its trade war with Washington shortly after President Donald Trump warned it not to retaliate in the long-running trade dispute between the world's two biggest economies. Trump said he would meet with Chinese President Xi Jinping next month. piled into safe-haven assets, including U.S. Treasuries and the Japanese yen.
"It's clear that there is a lot of nervousness around the U.S.-China trade negotiations and concern that it's really deteriorating pretty significantly and that's impacting all areas of markets," said Kristina Hooper, chief global market strategist at Invesco in New York.
China's finance ministry said it plans to set import tariffs ranging from 5 percent to 25 percent on a target list worth about $60 billion. Trump on Friday ordered his trade chief to begin the process of imposing tariffs on all remaining imports from China, but investors had taken solace in some comments from officials about the negotiations.
"The market thought it was positioning and at the end of the day there would be a deal and that over the weekend they would work things out and that is clearly not the way this thing is going," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
On Monday, the Dow Jones Industrial Average .DJI fell 617.38 points, or 2.38%, to 25,324.99, the S&P 500 .SPX lost 69.53 points, or 2.41%, to 2,811.87 and the Nasdaq Composite .IXIC dropped 269.92 points, or 3.41%, to 7,647.02. market has been looking around for an excuse to correct. We were straight up from Christmas," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "We now have an excuse to have a correction."
The pan-European STOXX 600 index .STOXX lost 1.21%.
In currencies, the yuan CNH= weakened to as far as 6.92 against the U.S. dollar, its lowest level since Dec. 24. dollar index .DXY , which measures the greenback against a basket of currencies, was flat, with the euro EUR= down 0.04% to $1.1228.
U.S. Treasury yields fell to six-week lows as investors piled into low-risk assets. 10-year notes US10YT=RR last rose 15/32 in price to yield 2.4015%, from 2.455% late on Friday.
Ten-year yields fell below those on three-month Treasury bills US3MT=RR . A sustained inversion of this part of the yield curve has preceded every U.S. recession in the past 50 years.
Spot gold XAU= added 1.1% to $1,299.72 an ounce.
Oil futures fell as worries about the trade talks spooked investors who had initially sent oil higher on concerns that tanker attacks in the Middle East could disrupt supplies. crude CLcv1 settled down 1% at $61.04 a barrel, while Brent LCOcv1 settled at $70.23 a barrel, down 0.55%.
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https://tmsnrt.rs/2LF2yVz GRAPHIC-Global assets in 2019
http://tmsnrt.rs/2jvdmXl GRAPHIC-World FX rates in 2019
http://tmsnrt.rs/2egbfVh
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