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GLOBAL MARKETS-U.S. stock futures, Asian shares drop as Trump slaps new tariffs on China

Published 2018-09-17, 09:27 p/m
© Reuters.  GLOBAL MARKETS-U.S. stock futures, Asian shares drop as Trump slaps new tariffs on China
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* S&P500 E-mini futures down 0.3 pct

* Ex-Japan Asia-Pacific down 0.15 pct, Nikkei up

* Trump imposes 10 pct tariffs on $200 bln goods from China

* U.S. 10-year bond yields near 4-month high

By Hideyuki Sano

TOKYO, Sept 18 (Reuters) - U.S. stock futures and Asian shares fell on Tuesday after U.S. President Donald Trump said he will impose tariffs on an additional $200 billion worth of Chinese imports, in a sharp escalation of the trade conflict between the world's two biggest economies.

The tariffs will be set at 10 percent.

Trump spared smart watches from Apple AAPL.O and some other consumer products such as bicycle helmets, but he warned that if China takes retaliatory action he will pursue tariffs on approximately $267 billion of goods. his latest comments as well as recent falls in his support, it is hard to expect Trump to soften his stance on trade in the near future," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE:MS) Securities.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.15 percent in early trade but Japan's Nikkei .N225 bucked the trend to gain 0.4 percent.

S&P500 E-mini futures ESc1 dropped 0.3 percent in Asian trade on Tuesday.

That came after all three major U.S. indexes fell on Monday, with the tech-heavy Nasdaq posting its biggest percentage loss since late July.

Apple Inc AAPL.O and Amazon.com AMZN.O , the world's top two companies by market capitalisation, fell 2.6 percent and 3.2 percent respectively, marking their biggest fall since late April, on worries about new tariffs, which were unveiled after U.S. market close on Monday.

Still, many market players expect the U.S. economy to ride out the impact for now.

"Tariffs on another $200 billion will mean about 12 percent of US imports have seen a tariff hike. That means an average tariff increase of 1.6 percent across all imports, so tiny compared to the 1930s, when they were 20 percent," said Shane Oliver, chief economist at AMP Capital Investors in Sydney.

"I still don't see a resolution between China and the U.S. until after U.S. mid-terms elections in November to early 2019."

In the currency market, the yen gained slightly while the risk-sensitive Australian dollar dropped.

The yen strengthened slightly to 111.74 per dollar JPY= , off Friday's two-month low of 112.175.

The Australian dollar shed as much as 0.5 percent in early trade to $0.7144 AUD=D4 .

The euro stood little changed at $1.1673 EUR= .

Oil prices fell on worries rising trade tensions between the U.S. and China could dent global crude demand.

U.S. West Texas Intermediate (WTI) crude futures CLc1 fell 0.4 percent to $68.61 a barrel while international benchmark Brent futures LCOc1 lost 0.4 percent to $77.72 per barrel.

Yet the 10-year U.S. Treasuries yield hit a near four-month high of 3.0220 percent on Monday, extending its rise on the back of a recent run of solid U.S. data, before stepping back to 2.981 percent US10YT=RR .

"U.S. bond yields have been supported by strong U.S. data, such as wages. Tariffs are not necessarily positive for bonds as they could be inflationary," said Tomoaki Shishido, fixed income strategist at Nomura Securities.

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