GLOBAL MARKETS-Asian stocks skid to 6-1/2-mth lows as Sino-U.S. trade row shakes markets

(Adds Chinese shares, updates prices throughout)
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* MSCI ex-Japan falls for a seventh day in a row
* Share decline follows losses in Wall Street Friday
* U.S. slaps 10% tariffs on $300 bln Chinese imports
* Markets price in sharper U.S. monetary policy easing

By Swati Pandey
SYDNEY, Aug 5 (Reuters) - Asian shares slid to 6-1/2-month
lows on Monday and the yuan plunged as a rapid escalation in the
Sino-U.S. trade war drove nervous investors to safe-havens such
as the yen, bonds and gold.
U.S. President Donald Trump abruptly decided on Thursday to
slap 10% tariffs on $300 billion in Chinese imports, stunning
markets and ending a month-long trade truce. China vowed on
Friday to fight back. In response, China's yuan weakened beyond the key
7-per-dollar threshold in a move that threatens to lead to
massive capital outflows. "We could see a more prolonged period of risk aversion,"
analysts at Singapore-based TD Securities wrote in a note.
"We think the latest development reiterates our view that
trade will remain a lingering headwind for the economy and
business investment in particular."
Asian shares sold off broadly with every single market
posting steep losses.
Japan's Nikkei .N225 stumbled almost 2% to the lowest
since early June, while Australian shares .AXJO slipped about
1% to spend their fourth straight session in the red. South
Korea's Kospi .KS11 tumbled 1.2% to hit the lowest since
December 2016.
That left MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS down 1.7% to 495.68, a level not
seen since late January and marking the longest stretch of
losses since October 2018.
In China, shares opened lower, with the blue-chip index
.CSI300 skidding 1% while Hong Kong's Hang Seng index .HSI
declined 2.2%.
E-Mini futures for the S&P500 ESc1 fell 1% in Asian
trading.
Oil prices were also pulled down again on demand worries.
The grim mood followed declines on Wall Street on Friday
with MSCI's gauge of world stocks .MIWD00000PUS posting its
largest weekly loss of the year.
The trade war between the world's two largest economies has
already disrupted global supply chains and slowed economic
growth.
The abrupt escalation capped a critical week for global
markets after the U.S. Federal Reserve delivered a widely
anticipated interest rate cut and played down expectations of
further easing.
However, investors were not buying Fed Chair Jerome Powell's
claim that the 25-basis-point rate reduction was a mere
"mid-cycle adjustment to policy".
Futures are now pricing in deeper cuts than before last
week's Fed meeting. The terminal U.S. rate 0#FF: is now seen
at 1.22%, 93 basis points below the current effective rate.
TD is forecasting five more cuts from the Fed, amounting to
125 basis points of easing, over next year.
Expectations of further monetary policy easing sent the
dollar skidding. It slipped to a seven-month trough of 105.78
against the Japanese yen JPY= while the dollar index .DXY
against a basket of six major rivals inched lower to 97.91 after
two straight days of losses.
The Australian dollar AUD=D3 , a liquid proxy for emerging
market assets, slipped to a fresh seven-month trough at $0.6748
after losing 1.6% last week.
The yen and the Swiss franc CHF= were boosted by
safe-haven demand from the escalating trade tensions. Trump is
also eyeing tariffs on the European Union but is yet to make any
formal announcements.
The euro EUR= held firm after two days of gains against
the dollar at $1.1119.
Sterling GBP= hovered near 2017 lows at $1.2159, pressured
by concerns about Britain exiting the European Union without a
deal in place. The pound has been whiplashed since late last
month when Boris Johnson, a figurehead for the "leave" campaign
in the 2016 Brexit referendum, became the country's prime
minister. Safe-haven assets have been in vogue with yields on
benchmark 10-year Treasury notes US10YT=RR at 1.7890%, their
lowest since Trump's election in November 2016, from 1.8550% on
Friday.
German 10-year government bond yields DE10YT=RR on Friday
dropped to an all-time low of -0.502% and the country's entire
government bond yield curve turning negative for the first time
ever. Spot gold XAU= firmed to $1,451.61, within striking
distance of a recent high of $1,452.60.
Oil extended losses with U.S crude CLc1 off 26 cents at
55.40 and Brent LCoc1 down 35 cents at $61.54.

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(Editing by Shri Navaratnam and Sam Holmes)