GLOBAL MARKETS-Hardening U.S.-China trade fight sends stocks, yuan reeling

* Global stocks gauge set for worst day of 2019
* 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
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(Updates with U.S. afternoon trading)
By Lewis Krauskopf
NEW YORK, May 13 (Reuters) - Global stock markets tumbled on
Monday and the Chinese yuan fell to its lowest level since
December as the trade dispute between the United States and
China escalated.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
2.05%, on pace for its biggest one-day drop in more than five
months as it touched a two-month low. Wall Street's main indexes
tumbled well over 2.5%.
China said it would impose higher tariffs on a range of U.S.
goods, striking back in its trade war with Washington shortly
after U.S. President Donald Trump warned it not to retaliate in
the long-running trade dispute between the world's two biggest
economies. Investors 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
692.83 points, or 2.67%, to 25,249.54, the S&P 500 .SPX lost
77.03 points, or 2.67%, to 2,804.37 and the Nasdaq Composite
.IXIC dropped 276.86 points, or 3.5%, to 7,640.09.
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.
The dollar index .DXY , which measures the greenback
against a basket of currencies, fell 0.03%, with the euro EUR=
up 0.01% to $1.1234.
U.S. Treasury yields fell to six-week lows as investors
piled into low-risk assets. Benchmark 10-year notes US10YT=RR last rose 17/32 in price
to yield 2.3944%, 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 $1,299.97 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.
U.S. crude CLcv1 fell 1.41% to $60.79 per barrel and Brent
LCOcv1 was last at $69.82, down 1.13% on the day.

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GRAPHIC-Chinese stocks lose shine 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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