GLOBAL MARKETS-Stocks ease as US trade war with China escalates; euro up

By Caroline Valetkevitch

NEW YORK, April 8 (Reuters) - Major stock indexes fell on Tuesday afternoon as the United States said 104% duties on imports from China will take effect shortly after midnight, while the euro and European equity index futures rose after reports that Germany's political parties reached a deal on a coalition.

Two people with knowledge of the matter told Reuters, however, that there was not yet an agreement on the German coalition.

Stocks had been sharply higher earlier in the day, with investors optimistic that Washington might be willing to negotiate on some of its aggressive tariffs.

The Trump administration also moved to quickly start talks with other trading partners targeted by President Donald Trump's sweeping tariff plan.

Stocks have posted heavy losses since Trump's unveiled late last Wednesday sweeping tariffs, with worries mounting that a global trade war would push the economy into recession.

Germany's NTV reported Germany's conservatives under chancellor-in-waiting Friedrich Merz on Tuesday reached a deal with the centre-left Social Democrats (SPD) to form a government.

The euro EUR= was last up 0.61% at $1.0971. Germany's EuroSTOXX 50 futures STXEc1 rose 0.72%, DAX futures FDXc1 were up 0.55% and CAC 40 futures FCEc1 were up 0.43%. Bund futures FGBLc1 trimmed losses a bit.

On Wall Street, the Dow Jones Industrial Average .DJI fell 337.84 points, or 0.89%, to 37,627.76, the S&P 500 .SPX fell 81.11 points, or 1.60%, to 4,981.14 and the Nasdaq Composite .IXIC fell 339.48 points, or 2.18%, to 15,263.78.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 2.43 points, or 0.33%, to 743.05.

Oil prices ended lower amid recession worries as the U.S.-China trade war escalated.

Brent futures LCOc1 fell $1.39, or 2.16%, to settle at $62.82 a barrel. U.S. West Texas Intermediate crude futures CLc1 settled down $1.12, or 1.85%, at $59.58.

Spot gold XAU= fell 0.13% to $2,978.68 an ounce.

Investors are looking ahead to the start of U.S. quarterly earnings reports this week. Adam Sarhan, chief executive of 50 Park Investments in New York said upbeat results could potentially be a catalyst to support stocks.

JPMorgan Chase JPM.N, Citigroup C.N and Wells Fargo WFC.N will kick off results on Friday. JPMorgan's CEO Jamie Dimon has warned that trade wars could have lasting negative consequences, including inflation and recession.