(Adds U.S. market open, byline, dateline; previous LONDON)
* Trump trade tweets halt recent stock market rally
* Oil prices climb before possible OPEC cuts
* Govt bond yields rise after surprise German SPD elections
By Herbert Lash
NEW YORK, Dec 2 (Reuters) - The dollar and global stock
markets retreated on Monday after U.S. President Donald Trump
said he would restore tariffs on some imports from Brazil and
Argentina, overshadowing data that showed the Chinese and euro
zone economies were stabilizing.
Stocks slid further on data from the Institute for Supply
Management (ISM) showing the U.S. manufacturing sector
contracted for a fourth straight month in November as new orders
slid to around their lowest level since 2012.
A World Trade Organization ruling that the European Union
continues to provide unfair subsidies to European planemaker
Airbus AIR.PA , which supports the U.S. case for retaliatory
tariffs, also weighed on European equities. Germany's export-sensitive DAX .GDAXI stock index tumbled
1.9%, its worst single-day decline since early October, when the
WTO approved U.S. moves to slap import tariffs on $7.5 billion
worth of European goods.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.52%, while the pan-European STOXX 600 index .STOXX lost
1.56%.
Trump's tweets triggered selling that accelerated on last
month's below-expectations U.S. manufacturing activity, said
Fawad Razaqzada, market analyst at Forex.com in London.
"It's a number of reasons coming in all at the same time,"
Razaqzada said. "But with the stock markets at record high
levels, this is always going to happen. Markets go up in stairs
and then on the way down, it's an elevator."
The major U.S. indexes last week hit record highs and MSCI's
index of equity markets in 49 countries was one point below an
all-time high established in January 2018.
The Dow Jones Industrial Average .DJI fell 213.54 points,
or 0.76%, to 27,837.87, the S&P 500 .SPX lost 22.75 points, or
0.72%, to 3,118.23 and the Nasdaq Composite .IXIC dropped
96.44 points, or 1.11%, to 8,569.03.
ISM said its index of U.S. factory activity dropped 0.2
point to a reading of 48.1 in November. A reading below 50
indicates contraction in factory output, which accounts for 11%
of the U.S. economy. The index needs to break below 42.9 to
signal a recession. The dollar dropped from six-month highs against the Japanese
yen and slid to a two-week trough versus the euro after the U.S.
manufacturing report.
The dollar index .DXY fell 0.42%, with the euro EUR= up
0.6% to $1.1081. The yen JPY= strengthened 0.46% versus the
greenback at 109.08 per dollar.
Market enthusiasm that has pushed U.S. stocks to record
levels was predicated on a recovery and Monday's data belied
that trend, said Jack Ablin, chief investment officer at Cresset
Capital Management in Chicago.
Looking at holiday sales, "there's going to be plenty of
good news to go around," Ablin said. "We could get some really
solid news to carry this market at least for the next week or
so," he said.
Commerce Department report that showed U.S. construction
spending unexpectedly fell in October as investment in private
projects tumbled to its lowest level in three years also weighed
on markets. Benchmark 10-year U.S. Treasury notes US10YT=RR fell
15/32 in price to yields up to 1.8258%.
Oil jumped above $61 a barrel, supported by hints that the
Organization of the Petroleum Exporting Countries and its allies
may agree to deepen output cuts at a meeting this week and as
rising Chinese manufacturing activity suggested stronger demand.
U.S. crude CLcv1 rose 1.65% to $56.08 a barrel and Brent
LCOcv1 gained 78 cents to $61.27.
Germany's borrowing costs rose after the Social Democrats
(SPD) chose new leaders critical of their own ruling coalition,
with yields on benchmark 10-year debt set for the biggest
one-day spike in nearly three months.
Benchmark German bond yields jumped across the board, with
10-year yields DE10YT=RR up more than 7 basis points to
-0.273%, their highest in nearly three weeks.
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