GLOBAL MARKETS-Stocks fall as Trump's China tariff threat adds to fears over virus-hit economies

* Many financial markets closed for May Day holiday
* ECB warns on growth outlook but asset purchases unchanged
* Oil prices wobble in volatile session
* Tracking COVID-19 spread: https://tmsnrt.rs/3aIRuz7

(Updates prices, comment)
By Rodrigo Campos
NEW YORK, May 1 (Reuters) - Wall Street took a nosedive on
Friday on fears that the world's two largest economies could
resume a trade war, dragging down a global stocks index on a day
that many financial markets were closed for a holiday.
The euro rose and the U.S. dollar fell against most of its
peers, while the pound succumbed to weak economic data. Crude
oil prices traded in and out of negative territory.
A threat by President Donald Trump to impose new tariffs on
China in retaliation for its handling of the novel coronavirus
outbreak soured investor sentiment. Tokyo
and New York markets were all open on Friday, although much of
Europe and Asia were closed for International Workers' Day.
Trump offered no evidence after claiming on Thursday he had
seen proof that the virus originated in a Chinese laboratory.
The pandemic, which has cost more than 60,000 lives in the
United States alone, has sparked a steep economic contraction
and is threatening Trump's chances of re-election in November.
"A rise in tension between China and the U.S. certainly
could have a negative impact on the U.S. economy and business
confidence, which is already hurt from the shutdowns," said
Carin Pai, director of equity management at Fiduciary Trust
International in New York.
The Dow Jones Industrial Average .DJI fell 622.03 points,
or 2.55%, to 23,723.69, the S&P 500 .SPX lost 81.72 points, or
2.81%, to 2,830.71, and the Nasdaq Composite .IXIC dropped
284.60 points, or 3.2%, to 8,604.95.
The benchmark London stocks index .FTSE lost 2.34% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
2.17%. The global index rose over 1% this week. U.S. Treasury yields were little changed after data showed
manufacturing activity in the world's largest economy plunged to
an 11-year low in April. The market looked ahead to next week's projection for U.S.
borrowing in the second quarter to finance enormous stimulus
efforts aimed at combating the economic fallout of the
coronavirus outbreak.
Tom Simons, money market economist at Jefferies in New York,
said the Treasury's projection for second-quarter borrowing is
going to be "astronomical."
"There's a lot of uncertainty how Treasury is going to
handle the financing issues because the total number they have
to come up with is so big," he said.
Benchmark 10-year notes US10YT=RR last rose 2/32 in price
to yield 0.6181%, from 0.625% late on Thursday.
In a sign of the challenge facing global policymakers, the
European Central Bank said the euro zone economy is likely to
rebound in the second half of this year but may fail to return
to last year's level until as late as 2022 due to the pandemic.
However, the euro index =EUR rose the most in nearly six
weeks.
The dollar index =USD fell 0.05%, with the euro EUR= up
0.21% to $1.0978.
The Japanese yen strengthened 0.26% versus the greenback at
106.93 per dollar, while sterling GBP= was last trading at
$1.2491, down 0.80% on the day.
The offshore Chinese yuan CNH= hit its weakest in a month
versus the U.S. dollar after Trump's tariff threats.
Oil prices wobbled again as weak demand due to the virus and
excess supply outweighed a record output cut by OPEC and its
allies. U.S. crude CLc1 recently rose 4.78% to $19.74 per
barrel and Brent LCOc1 was at $26.52, up 0.15% on the day.
Spot gold XAU= added 1.1% to $1,698.53 an ounce.