GLOBAL MARKETS-Stock losses steepen as U.S. puts yuan in crosshairs

* MSCI Asia-Pacific index down 1.5%, Nikkei loses 2.1%
* Washington determines China a currency manipulator
* Offshore yuan falls further from 7-per-dollar threshold
* U.S. Treasury 10-year yield drops to lowest since Oct 2016
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Shinichi Saoshiro
TOKYO, Aug 6 (Reuters) - Global stocks extended already
substantial losses on Tuesday as China's yuan currency dropped
to an 11-year low after Washington designated Beijing a currency
manipulator in a rapid escalation of the U.S.-China trade war.
Safe-haven assets, including bonds and some currencies such
as the yen and Swiss franc, benefited as investors scurried to
avoid risk.
U.S. Treasury Secretary Steven Mnuchin said on Monday the
government had determined that China is manipulating its
currency, and that Washington would engage the International
Monetary Fund to eliminate unfair competition from Beijing.
"Given the fragile state of markets, this is likely to be
viewed as an escalation of the trade war and exacerbate the
market sell-off," wrote Steve Englander, head of global G10 FX
research at Standard Chartered Bank.
"In market terms, the designation, however meretricious,
will likely be seen as a further ramping up of the trade dispute
and possibly leading to some reaction by China."
The Trump administration's dramatic move against China
hastened the risk aversion seen in global markets this week. On
Monday, China let the yuan slide in response to the latest U.S.
tariffs, which are expected to further aggravate trade tensions
between the world's two largest economies. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1.5% to its lowest level since January.
The Shanghai Composite Index .SSEC retreated 2%.
Japan's Nikkei .N225 shed 2.1%, Australian stocks .AXJO
fell 2.3% and South Korea's KOSPI .KS11 slid 1.6%.
"Following the latest development in the U.S.-China trade
war, all the economic views and moves in the currency and equity
markets are driven by a 'risk off' mentality, which in turn is
boosting bonds," said Kota Hirayama, senior emerging markets
economist at SMBC Nikko Securities.
"The fact that U.S. yields are falling sharply even though
Federal Reserve Chairman Jerome Powell did not signal further
easing explains it all."
S&P 500 futures ESc1 were down 0.5% in Asian trade. Wall
Street's major indexes posted their biggest percentage drop of
the year on Monday on concerns about the U.S.-China trade
war. .N
MSCI's All Country World Index .MIWD00000PUS , which tracks
shares in 47 countries, extended last week's slide and slumped
2.5% to a two-month low on Monday.
The Chinese yuan CNY= onshore fell to an 11-year low on
Tuesday, brushing 7.0699 per dollar. In a symbolic move, Beijing
let the yuan breach 7-per-dollar on Monday for the first time
since late 2008.
China's offshore yuan stretched the previous day's slide,
weakening to 7.1288 CNH=D4 , the lowest level since
international trading in the Chinese currency began in 2010. It
last traded at 7.0945.
The Japanese yen, a perceived safe-haven in times of market
turmoil and political tensions, touched a seven-month high of
105.520 per dollar JPY= before slipping back to 106.290.
The Swiss franc, another currency sought in times of
turmoil, has gained roughly 1% against the dollar this week. It
touched a six-week peak of 0.9700 franc per dollar CHF= .
Investor demand for other safe-havens such government bonds
also remained high as risk aversion gathered momentum.
The 10-year U.S. Treasury yield US10YT=RR extended sharp
falls overnight and declined to 1.672%, its lowest since October
2016.
Japan's 10-year yield JP10YTN=JBTC fell to a three-year
trough of minus 0.215%.
Brent crude oil futures LCOc1 plumbed a seven-month low of
$59.07 per barrel as the trade war raised concerns about lower
demand for commodities. Brent last traded at $59.89.

(Editing by Sam Holmes and Neil Fullick)