US STOCKS-U.S. stocks retreat on economy and trade jitters

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* Trump to restore steel, aluminum import tariffs
* U.S. manufacturing contracts in Nov. for 4th straight
month -
ISM
* Online holiday spending seen hitting record
* Indexes fall: Dow 0.95%, S&P 0.86%, Nasdaq 1.12%

(Updates to market close)
By Stephen Culp
NEW YORK, Dec 2 (Reuters) - Wall Street stepped back from
last week's record highs on Monday, with weak U.S. manufacturing
data and fresh trade worries keeping buyers on the sidelines.
All three major U.S. stock averages began the last month of
the year in the red as investors returned from the long holiday
weekend.
A report from the Institute for Supply Management (ISM)
showed U.S. manufacturing activity contracted in November for
the fourth consecutive month, stoking concerns that the longest
period of economic expansion in U.S. history could be losing
steam. "The weaker-than-forecast manufacturing data doesn't help,"
said Oliver Pursche, chief market strategist at Bruderman Asset
Management in New York. "That trend is likely to continue in the
short term."
"The question is will consumers continue to keep the economy
afloat," Pursche added. "And so far, the preliminary data
regarding Black Friday spending is very positive. It's a big
number."
And Cyber Monday sales were expected to hit a record
following $11.6 billion in online sales on Thanksgiving and
Black Friday. Earlier, U.S. President Donald Trump tweeted that he would
restore tariffs on steel imported from Brazil and Argentina,
boosting shares of U.S. steel makers U.S. Steel Corp X.N and
AK Steel Holding Corp AKS.N by 4.2% and 4.7%, respectively.
Still, it was the latest sign that the multi-front trade
between the United States and its global trading partners will
continue to dominate markets and hinder global economic growth.
The news comes on the heels of recent Wall Street highs,
driven to records last week on hopes of an imminent "phase one"
trade agreement between the United States and China.
A senior adviser to Trump said on Monday it was still
possible that a deal with China could be reached by the end of
the year.
"This is not just about Trump announcing steel tariffs, but
fears that he's going to allow increases in tariffs against
China on December 15," added Pursche. "That's part of the story.
"On the trade front, we need something and it doesn't have
to be much," Pursche continued. "People have taken the slightest
bit of positive news and sunk their teeth into it."
The Dow Jones Industrial Average .DJI fell 267.35 points,
or 0.95%, to 27,784.06, the S&P 500 .SPX lost 27 points, or
0.86%, to 3,113.98 and the Nasdaq Composite .IXIC dropped
97.48 points, or 1.12%, to 8,567.99.
Of the 11 major sectors in the S&P 500, only consumer
staples .SPLRCS and energy .SPNY ended the session in
positive territory.
Real estate .SPLRCR , technology .SPLRCT and
trade-sensitive industrials .SPLRCI were the largest
percentage losers.
Monday's slide in U.S. stocks prompted at least one large
investor to pay $31 million to buy stock options that would
guard against a sharper hit to stocks into the start of next
year. Among stocks, Roku Inc ROKU.O dropped 15.2% following
Morgan Stanley's downgrade to "underweight".
Declining issues outnumbered advancing ones on the NYSE by a
2.66-to-1 ratio; on Nasdaq, a 2.48-to-1 ratio favored decliners.
The S&P 500 posted 16 new 52-week highs and 2 new lows; the
Nasdaq Composite recorded 65 new highs and 39 new lows.
Volume on U.S. exchanges was 6.84 billion shares, matching
the 6.84 billion average over the last 20 trading days.