GLOBAL MARKETS-European stocks struggle, dollar near three-year low, gold hits $3,500

By Elizabeth Howcroft

LONDON, April 22 (Reuters) - European stock markets edged lower on Tuesday, after U.S. President Donald Trump's attack on the Federal Reserve chair sparked a selloff of U.S. assets, putting fresh pressure on Treasuries, while gold hit a new record high.

Trump stepped up his criticism of Fed Chair Jerome Powell for not cutting interest rates, calling him a "major loser", in a social media post on Monday , which raised concerns about the president's influence over the central bank.

Wall Street indexes lost around 2.4% on Monday and the dollar hit its lowest in three years. U.S. Treasury yields rose as traders worried that the government could try to replace Powell with someone who would cut rates.

Trump said last week he believes Powell will leave his job if Trump asks him to do so, although Powell himself has said he would not. It is unclear whether Trump has the authority to fire Powell, though lawsuits over unrelated firings by Trump are being watched as possible proxies.

Investor confidence has already been shaken by Trump's volatile policymaking and back-and-forth announcements about U.S. tariffs, which traders fear could create severe disruption in world trade.

The selloff was less severe during Asian trading on Tuesday, and European stock markets showed signs of steadying, though markets were mixed, with the STOXX 600 down 0.4% .STOXX and Germany's DAX down 0.2% .GDAXI at 0909 GMT. The FTSE 100 was up 0.2% .FTSE.

The MSCI World Equity index was down by less than 0.1% on the day .MIWD00000PUS.

"The market is very jittery so any sense of negativity, any sense of worry, just gets escalated or exaggerated," said Fiona Cincotta, senior market analyst at City Index.

"There’s a lot of investor anxiety, just generally surrounding the trade war, but then you’re seeing that heightened because of the confrontation between Trump and Powell."

The U.S. dollar index was around 98.369, steadying after having hit its lowest since March 2022 on Monday =USD. The euro was a touch lower at $1.1502 EUR=EBS.

"The independence of the Federal Reserve is a cornerstone of the dollar's credibility," noted Quasar Elizundia, a research strategist at broker Pepperstone.

"The dollar's status as the ultimate safe-haven asset can no longer be taken for granted; it is being actively challenged."

U.S. Treasury yields - which have risen in recent weeks - showed signs of steadying in early trading on Monday, with the U.S. 10-year yield at 4.4125% US10YT=RR.

The weakness in the dollar, along with demand for safe-havens, helped gold hit a new all-time high of $3,500.05, before easing to around $3,455.43, still up on the day overall XAU=.

Traders will be watching earnings reports throughout the week, with 27% of the S&P 500 due to give results. Tesla TSLA.O is due later on Tuesday, having already shed almost 6% on Monday amid reports of production delays, and Google-owner Alphabet's earnings are due on Thursday GOOGL.O.

Oil prices rose, due to short-covering , but traders remained worried about U.S. tariffs impacting fuel demand.

While White House talks on various trade deals are underway or about to start, a quick resolution seemed unlikely. Analysts at JPMorgan noted the average trade deal took 18 months to negotiate and 45 months to implement.

"We reiterate our view that if current policies do not change, then the probability of a U.S. recession in 2025 is 90%," they said in a note.

China on Monday warned countries against striking trade deals with the U.S. at China's expense.

text_section_type="notes">To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA