* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* MSCI ACWI at lowest in over a month
* Yen, bonds and gold benefit
* Yuan falls to over 10-year low
By Ritvik Carvalho
LONDON, Aug 5 (Reuters) - Global stocks fell for a sixth day
on Monday as an escalation of a trade war between the United
States and China spooked markets and the yuan fell to its lowest
levels in over a decade.
Safe-haven assets, including the Japanese yen, core
government bonds and gold, rallied.
The pan-European STOXX 600 index .STOXX shed 2% on top of
the 2.5% it lost on Friday -- its worst day so far in 2019 --
after U.S. President Donald Trump signalled another round of
tariffs on Chinese imports. The index was also on track for its
biggest two-day decline in over three years. .EU
"Markets had not been expecting the latest US-China trade
talks to conclude with any significant breakthrough last week,
but very few expected President Trump to slap 10% tariffs on
$300 billion worth of Chinese goods," said Hussein Sayed, chief
market strategist at FXTM.
MSCI's All Country World Index .MIWD00000PUS , which tracks
shares in 47 countries, was down 0.7% on the day. Including
Friday's loss, that put it down almost 2%.
Asian shares suffered their steepest daily drop in 10
months, with MSCI's broadest index of Asia-Pacific shares
.MIAPJ0000PUS outside Japan sinking 2.5% to depths not seen
since late January.
The VIX .VIX volatility index - also known as Wall
Street's "fear gauge" - rose to 21.48, its highest level since
May 9. Europe's equivalent .V2TX hit its highest since early
January. S&P 500 futures ESc1 were 1.4% lower.
"We reiterate our view to scale back equity positions to
strategic allocations after strong gains year to date, amid the
ongoing trade-related uncertainties," Credit Suisse analysts
wrote in a note to clients.
The biggest mover in currencies was the yuan, which fell
past the key level of 7 to the dollar as Chinese authorities -
expected to defend the currency at that level - allowed it to
break through to its weakest in the onshore market since the
2008 global financial crisis.
In offshore markets, the yuan CNH=EBS fell to its weakest
since international trading of the Chinese currency began.
Headed for its biggest one-day drop in four years, it was last
down 1.6% at 7.090 in offshore markets. FRX/
"Over the past couple of years, China has kept the renminbi
stable against the basket, but with the renminbi TWI
(trade-weighted index) now testing the lower end of the range in
play since 2017, investors may turn nervous, introducing another
dose of volatility," Morgan Stanley strategists wrote in a note
to clients.
The currencies of other Asian economies closely linked with
China's growth prospects also dropped.
The Korean won KRW= fell 1.4% against the dollar, on
course for its biggest one-day loss since August 2016. The new
Taiwan dollar fell more than 0.7% TWD= .
BID FOR SAFETY
Japan's yen, which investors tend to buy in times of risk
aversion, rose 0.7% to its highest since a January flash crash.
JPY=
Dutch 30-year government bond yields turned negative for the
first time as euro zone yields sank further amid concerns about
U.S.-China trade and a no-deal Brexit. GVD/EUR
U.S. 10-year yields US10YT=RR fell to 1.7599%. Germany's
10-year bund yields fell to as low as -0.53% DE10YT=RR .
The Swiss franc CHF= was also boosted by safe-haven
demand. Trump is also eyeing tariffs on the European Union, but
has yet to make a formal announcement. The euro EUR= surged,
gaining 0.6% to the dollar at $1.1172.
Against a basket of currencies, the dollar fell to its
lowest since July 25. DXY=
Sterling plunged to a 23-month low against the euro and near
a 31-month low versus the dollar as fears of a disorderly Brexit
grew. GBP/
Oil extended losses with U.S crude CLc1 down 1% at $55.1
and Brent LCoc1 down 1.2% at $61.17.
Gold prices jumped more than 1% to their highest in more
than six years, with spot gold prices up 1.1% to $1,456.51 per
ounce. XAU=