EMERGING MARKETS-Asian stocks sink as global slowdown worries grow

By Himanshi Akhand

April 7 (Reuters) - Emerging Asian stock markets plunged to multi-year lows on Monday, as investors feared that a full-blown trade war fuelled by U.S. President Donald Trump's harsher-than-expected tariffs could trigger a sharp global economic slowdown.

The Singapore benchmark index .STI fell 6.8% and was on course for its biggest one-day percentage decline since March 2020. Malaysian stocks .KLSE fell 5.6% to their lowest level since October 2023.

Fears of an all-out trade war grew after China struck back with a slew of countermeasures including extra levies of 34% on all U.S. goods and export curbs on some rare earths.

Trump had imposed additional 34% tariffs on China, bringing the total new levies this year to 54%. His tariffs on export-driven Southeast Asian nations were also some of the biggest, with a 46% levy on Vietnamese exports, 37% on Thailand, and 24% on Malaysia. The tariff for Singapore was set at 10%.

Trump also told reporters that investors would have to "take medicine to fix something" and said he would not make a deal with China until the U.S. trade deficit was sorted out.

"The lack of any policy response from the Trump administration on the market sell-off is adding to the uncertainty, reinforcing the idea that the current trajectory may remain unchanged in the near term," said Charu Chanana, chief investment strategist at Saxo in Singapore.

"Unless we see a clear pivot from policymakers, volatility is likely to stay elevated, and the path of least resistance for risk assets remains to the downside."

Taiwan stocks .TWII sank almost 10% and were on course for their biggest one-day percentage drop since at least 1990. The market was closed for holidays on Thursday and Friday.

Taiwan's top financial regulator announced it would impose temporary curbs on short-selling of shares throughout the week to help deal with potential market turmoil from the tariffs, while the head of the island's stock exchange said it would roll out more stabilisation policies if needed.

Stocks in South Korea .KS11 and the Philippines .PSI also dropped more than 4% each.

The mounting risk of recession prompted futures markets to price in almost five quarter-point cuts in U.S. interest rates this year, pulling Treasury yields down sharply and weighing on the dollar. MKTS/GLOB

Among Asian currencies, the Malaysian ringgit MYR= slipped 0.7% and the South Korean won KRW=KFTC fell 0.3%.

Indonesian markets are due to reopen on Tuesday after a week of holidays with investors watching closely for their initial reaction to U.S. tariffs.

The rupiah IDR= has already fallen nearly 3% this year and two weeks ago reached a level not seen since 1998 due to concerns over fiscal health, government policies and weakening domestic demand.

HIGHLIGHTS:

Singapore banks - DBS DBSM.SI, UOB UOBH.SI and OCBC OCBC.SI slump between 5.5% and 8.7%

Japan's Nikkei sinks to 1-1/2-year low, bank index plunges 17% .T

Markets in Thailand, Indonesia and Vietnam closed for a holiday