TOKYO (Reuters) -The U.S. dollar hovered near a three-month low versus major peers on Wednesday after the latest round of U.S. tariffs and countermeasures from Canada and China stoked fears of an escalating trade war.

Hong Kong stocks rose but the yuan retraced part of Tuesday's advance as annual parliamentary sessions of the National People's Congress (NPC) kicked off with Beijing retaining a roughly 5% economic growth goal for 2025.

The euro pushed to a nearly four-month peak after German political parties agreed to a 500-billion-euro infrastructure fund. Sterling also stood tall near a three-month high.

Crude oil swooned to six-month lows, while bitcoin found its feet around $87,500 following a volatile week.

"Fears about weaker U.S. and global economic activity are manifesting in the markets, with cyclicals driving the sell-off," said Kyle Rodda, senior financial markets analyst at Capital.com.

"The uncertainty is enough to keep investors cautious, with American businesses and consumers presumably feeling the same."

Australian stocks slumped 1.1%, while Japan's Nikkei was flat after flipping between small gains and losses.

Hong Kong's Hang Seng rallied 1.1%, although mainland Chinese bourses were mixed, with an index of blue chips little changed.

China's offshore yuan edged down about 0.3% to 7.2716 per dollar, after strengthening 0.7% on Tuesday.

Along with an unchanged economic growth target, Beijing committed more fiscal resources than last year to mitigate the impact of rising U.S. tariffs.

China aims for a budget deficit of around 4% of gross domestic product (GDP) in 2025, up from 3% in 2024.

"Growth, inflation and fiscal spend targets were all pretty much as expected," said Charu Chanana, chief investment strategist at Saxo.

"It doesn't look like China wants to go overboard with spending right away given the tariff threats, as they potentially want to save ammunition for external threats later in the year."

Overnight, the U.S. S&P 500 slid 1.2%, but futures rose 0.5% on Wednesday.

MSCI's world equity index was flat, leaving it 1.9% lower so far this week.

U.S. President Donald Trump's 25% tariffs on imports from Mexico and Canada, along with doubled duties of 20% on Chinese goods, took effect on Tuesday. China and Canada retaliated while Mexican President Claudia Sheinbaum vowed to respond likewise, without giving details.

The U.S. dollar index, which measures the currency against the euro, sterling and four other major counterparts, was little changed at 105.60, after a two-day 1.9% slump that took it as low as 105.49 for the first time since December 6.

The euro rose as high as $1.0637 for the first time since November 13 in the latest session.

Sterling was steady at $1.2786, not far from Tuesday's peak of $1.27995, a level last seen on December 6.

The parties hoping to form Germany's next government on Tuesday agreed to create a 500 billion euro infrastructure fund and overhaul borrowing rules in a tectonic spending shift to revamp the military and revive growth in Europe's largest economy.

Oil fell for a third session on Wednesday amid concerns over global growth due to tit-for-tat tariffs and plans by OPEC+ to raise output in April.

Brent futures eased 15 cents to $70.89 a barrel, after falling as low as $69.75 in the previous session, its lowest since September 11.

U.S. West Texas Intermediate (WTI) crude fell 40 cents a barrel to $67.86 after dipping as low as $66.77 in the previous session for the first time since November 18.