(Updates market levels, share price moves and context)

SHANGHAI, April 7 (Reuters) - Hong Kong and Chinese

stocks dived on Monday as markets around the world crumbled in

the face of a widening global trade war and fears it will

unleash a deep recession.

Hong Kong's Hang Seng index slumped more than 10% in

morning trade which, if sustained, would make for the

benchmark's largest daily fall since the 2008 global financial

crisis.

Banking stocks collapsed, with Hong Kong-listed shares of

HSBC and Standard Chartered tumbling 15%.

China's CSI300 blue-chip index fell more than 5%

with selling in nearly every sector. China's yuan

slipped to its lowest since January and bonds rallied sharply.

China, which is now facing U.S. tariffs of over 50%,

responded in kind on Friday by slapping extra levies on U.S.

imports.

The intensifying spat between the world's two biggest

economies threatens to upend trade flows, and besides hitting

Chinese earnings, it is also expected to drive a slowdown in

global demand at a time of stuttering growth in China.

Mainland indexes of solar companies and

household appliance makers notched losses around

10%. The Hang Seng volatility index shot to its highest

since October.

In the absence of any hint of a backdown from the White

House, the focus for investors will be on Beijing to come up

with measures to support Chinese exporters and shore up the

domestic economy.

Shares in online giants Alibaba ( BABA ) and Tencent ( TCTZF )

were down more than 8%.