* Asia stocks fall on trade war concerns
* British pound rocked by Johnson's election threats
* U.S. bond yields up slightly after sharp fall in Aug
* European shares seen dipping slightly
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, Sept 3 (Reuters) - Global stocks dropped on Tuesday,
hurt by U.S.-China trade frictions while the British pound fell
to its lowest since January 2017 amid political uncertainty as
Prime Minister Boris Johnson tried to stymie lawmakers' efforts
to stop a no-deal Brexit.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS shed 0.7%. India, closed on Monday, led losses,
with the benchmark .BSESN dropping 1% following
worse-than-expected economic growth data on Friday.
China's mainland shares .CSI300 were fractionally lower
while Japan's Nikkei inched up 0.1%.
European shares are expected to dip, with pan-European Euro
Stoxx 50 futures STXEc1 down 0.09%.
In an escalation of their trade war, the United States on
Sunday began imposing 15% tariffs on a variety of Chinese goods,
and China began imposing new duties on U.S. crude oil.
Although U.S. President Donald Trump has said both sides
would still meet for talks later this month, tensions show
little sign of abating.
China said on Monday it lodged a complaint against the
United States at the World Trade Organization over U.S. import
duties, trashing the latest tariff actions as violating the
consensus reached by leaders of China and the United States in a
meeting in Osaka.
"We have so many problems around the world, starting from
the U.S.-China trade war and Brexit. But investors appear to be
getting used to be exposed to them," said Hiroyuki Ueno, senior
strategist at Sumitomo Mitsui Trust Asset Management
"No one really thinks Washington and Beijing will solve the
issues. But as long as the U.S. economy keeps going, stock
prices will have limited downside," he said.
U.S. manufacturing survey by the Institute for Supply
Management (ISM) due at 1400 GMT Tuesday is a major focus for
investors.
Although U.S. manufacturing activity has been slowing in
recent months, the ISM's index has so far stayed above 50,
pointing to growth in the sector.
U.S. bond yields rose a tad on profit-taking after a market
holiday in the United States on Monday.
The 10-year U.S. Treasuries yield rose 2.5 basis points to
1.532% US10YT=RR , off a three-year low of 1.443% touched last
week. The yield dropped 51.5 basis points last month, the
biggest monthly drop since August 2011.
In the currency market, sterling dropped as much as 0.58% to
$1.1993 GBP=D4 , its lowest level since January 2017, extending
Monday's 0.85% fall.
Prime Minister Johnson implicitly warned lawmakers on Monday
that he would seek an election on Oct 14 if they tied his hands
on Brexit, ruling out ever countenancing a further delay to
Britain's departure from the European Union. On Tuesday, lawmakers will decide whether to move Britain
one step closer to a snap election when they vote on the first
stage of their plan to block Johnson from pursuing a no-deal
Brexit. "Depending on further developments in UK politics, the pound
could see sharp moves in the coming week or two. We think it
could fall to as low as $1.13 this month," said Sumino Kamei,
senior currency strategist at MUFG Bank.
Uncertainties over Brexit have already hit the UK economy,
with survey by the IHS Markit/CIPS showing British manufacturing
contracted last month at the fastest rate in seven years.
The picture is not much better in Europe, and the European
Central Bank is widely expected to cut interest rates further
into negative levels next week to cushion the blow, pressuring
the euro.
The common currency fell 0.25% to a two-year low of $1.0939
EUR= . The two-year German government bond yield has dipped to
minus 0.919% on Monday, near its record low around minus 0.964%
hit in early 2017.
The offshore Chinese yuan dropped to a record low of 7.1975
per dollar CNH= on Tuesday morning while the Australian dollar
traded down 0.15% at $0.6705 AUD=D4 , cutting some losses after
the Reserve Bank of Australia kept interest rates on hold.
Still, the Aussie stayed within a stone's throw from a
decade-low of $0.66775 hit last month.
Argentine bond prices fell to record lows on Monday and the
official and black market pesos diverged after the country
imposed capital controls in a bid to stem a currency rout that
is sharpening the risk of default. The peso ARS=RASL closed 0.88% stronger in official
markets, but closed 0.79% weaker in the black market at 63.5 per
dollar.
Oil prices were also dented by concerns over the trade war.
U.S. West Texas Intermediate (WTI) crude CLc1 lost 0.47% to
$54.84 per barrel. International benchmark Brent futures LCOc1
dipped 0.05% to $58.63 per barrel.
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U.S. ISM index forecast https://tmsnrt.rs/2zItavS
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(Editing by Richard Borsuk)