GLOBAL MARKETS-Stocks, bond yields fall; Trump tariffs raise economic worries

By Caroline Valetkevitch

NEW YORK, March 4 (Reuters) - Major stock indexes were sharply lower on Tuesday, with the Nasdaq Composite index down 10% from its December record high and Treasury yields also declining as the United States hit Canada, Mexico and China with steep tariffs, fueling investor worries about the impact on the economy.

The S&P 500 .SPX was down more than 1%, while MSCI's gauge of stocks across the globe .MIWD00000PUS dropped 13.14 points, or 1.54%, to 842.67. The Nasdaq .IXIC fell 10% from its record high hit on December 16 into correction territory.

Wall Street's selloff was broad, with all of the major sectors lower. Financials .SPSY were down 3.9%, the most of any of the sectors.

"The news cycle is spinning so fast and there is so much going on. Tariffs were the final straw that broke the camel's back. The market is throwing a temper tantrum," said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

Tariffs add to concerns about higher prices for consumers, he said. "This economy has been driven by the consumer and saved by the consumer. This is about people's grocery bills going up," he said.

U.S. President Donald Trump's new 25% tariffs on imports from Mexico and Canada and the doubling of duties on Chinese imports could rattle nearly $2.2 trillion in annual trade with the U.S.' three largest trading partners.

China immediately responded with 10%-15% tariffs on certain U.S. imports from March 10 and a series of new export restrictions for designated U.S. entities, while Canadian Prime Minister Justin Trudeau said Ottawa was launching 25% tariffs on C$30 billion ($20.72 billion) worth of U.S. imports.

The Dow Jones Industrial Average .DJI fell 764.08 points, or 1.75%, to 42,434.53, the S&P 500 .SPX slid 99.56 points, or 1.68%, to 5,750.16 and the Nasdaq Composite .IXIC dropped 258.57 points, or 1.39%, to 18,094.61.

The pan-European STOXX 600 .STOXX index was down 2.2%. Earlier in Asia, Japan's Nikkei .N225 fell 1.2% and Taiwan's benchmark .TWII lost 0.7%.

Government bond yields fell. The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB declined 3.8 basis points to 4.142% after falling to 4.115%, its lowest since October 21.

The dollar weakened to a three-month low, while investors flocked to traditional safe-haven currencies the Japanese yen JPY=EBS and Swiss franc CHF=EBS amid growth and tariff worries.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, was down 0.32% at 106.20, with the euro EUR= up 0.4% at $1.0528. Against the Japanese yen JPY=, the dollar weakened 0.65% to 148.55.

Other riskier assets lost ground too, with bitcoin BTC= down 3.43% at $82,365.83.

Trump's address to the U.S. Congress later on Tuesday could deliver further surprises, and investors are also anxious for Friday's February nonfarm payrolls report.

Investors were also unnerved by Trump pausing military aid to Ukraine following his clash in the Oval Office last Friday with Ukrainian President Volodymyr Zelenskiy.

U.S. crude CLc1 fell 1.46% to $67.37 a barrel and Brent LCOc1 fell to $70.25 per barrel, down 1.91% on the day.