*

Dollar up as Trump talks of tariffs on steel, aluminium

*

Stocks shrug off tariff threat, with S&P 500 futures

higher

*

Markets see less scope for Fed rate cuts this year

By Wayne Cole and Harry Robertson

SYDNEY/LONDON, Feb 10 (Reuters) - The dollar edged

higher on Monday after U.S. President Donald Trump warned more

tariffs were imminent including on steel and aluminium, although

U.S. futures and European stocks shrugged off the looming levies

and rose.

Speaking to reporters on Air Force One, Trump said he would

announce on Monday 25% tariffs on all steel and aluminium

imports into the U.S., and reveal other reciprocal tariffs on

Tuesday or Wednesday.

China's retaliatory tariffs on some U.S. exports take effect

on Monday, with no sign as yet of progress between Beijing and

Washington.

Investors reacted by pushing the dollar slightly higher,

with the index tracking the U.S. currency up just over

0.1% from Friday's close, at 108.17.

It climbed 0.59% against Japan's yen, which had its

best week since November last week as investors bet on more Bank

of Japan rate hikes. The euro was flat at $1.0329.

The dollar rose against the currencies of

commodity-exporting countries before moderating. The Canadian

dollar was last around 0.2% lower.

"Much uncertainty about the nature, timing and magnitude of

these tariffs looks likely to keep the dollar supported this

week," said Chris Turner, global head of markets at European

bank ING.

Turner also flagged the risk that Trump imposes reciprocal

tariffs on many countries, as he said he would on Friday, which

could shake currencies around the world.

U.S. stock futures initially fell but quickly recovered as

investors looked ahead to another busy week of earnings. S&P 500

contracts were last up 0.35%, after the cash index

fell 0.95% on Friday.

Shares had been roiled by some mixed earnings numbers last

week, though overall earnings per share growth is running at 12%

and above early expectations of 8%.

Europe's continent-wide STOXX 600 index rose 0.28%

in early trading after slipping 0.38% on Friday.

The shares of some European steelmakers slipped, including

Luxembourg-based ArcelorMittal and Germany's Salzgitter

.

Analysts say tariffs could put upward pressure on U.S.

inflation and further limit room for the Federal Reserve to ease

policy, which has supported the U.S. dollar since Trump's

re-election.

Markets had already scaled back expected rate cuts this year

to just 36 basis points, from around 42 basis points, following

a broadly upbeat payrolls report on Friday.

Fed Chair Jerome Powell is due to appear before the House of

Representatives on Tuesday and Wednesday and the impact of

tariffs on policy is sure to be a hot-button issue.

U.S. Treasuries fell slightly on Monday, with yields on

10-year notes up 1 basis point at 4.497%. Yields

move inversely to prices.

Japan's Nikkei stock index was flat, while Hong

Kong's Hang Seng rallied 1.84%. China's CSI 300

climbed 0.21%.

"Markets are largely taking unfolding events in their

stride," said Derren Nathan, head of equity research at

Hargreaves Lansdown.

"Stocks in China and Hong Kong were up overnight. Perhaps

(due to) a mixture of trade restrictions not being as bad as

they might have been and hope for further Chinese stimulus."

Worries about Chinese deflation were soothed by data showing

consumer inflation accelerated to its fastest in five months in

January.

Gold prices hit another record high at $2,901 an ounce

, helped in part by talk Trump might impose tariffs on the

metal.

London aluminium traded in a tight range on Monday

as investors weighed the possible metals tariffs.

Oil prices ticked up after three weeks of losses that have

been partly driven by trade concerns. Brent crude was

0.7% higher at $75.19 a barrel.