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Mexican peso, Canadian dollar slide on threat of 25%

tariffs

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Asian stocks decline, led by Japan amid risks to exporters

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Chinese stocks resilient as tariffs less than mooted 60%

(Updates throughout with early European trading action;

refreshes prices at 0855 GMT)

By Amanda Cooper

LONDON, Nov 26 (Reuters) - The dollar rallied on Tuesday

while European shares fell after U.S. President-elect Donald

Trump pledged tariffs on all imports from Canada and Mexico, and

additional tariffs on China.

European equities dropped, led by steep declines in

automaker stocks, one of the potential losers from any

Trump-imposed tariffs on the European Union.

The Mexican peso and Canadian dollar came

under fire, while the euro also wilted.

"The dollar's had a knee-jerk move higher, the Canadian

dollar's softer, the peso is softer and the equity reaction -

particularly in Europe - makes sense," Pepperstone senior market

strategist Michael Brown said.

"Because the market's thinking, 'well, what's the one

country or the one bloc that's likely to be next? It's probably

going to be the EU. So naturally you're going to be short

European equities this morning," he said.

The STOXX 600 fell 0.7% in early trade, with shares

like Volkswagen and Stellantis ( STLA ) - the

maker of Chrysler, Dodge and Fiat - down 2.6-5%.

U.S. S&P 500 futures eased 0.1% following a 0.3%

gain in the cash index overnight.

The weekend nomination by Trump of Scott Bessent as Treasury

Secretary triggered a wave of positive sentiment on Monday that

boosted stocks and bonds, as the fund manager is viewed as a

voice for Wall Street in Washington.

But Tuesday's tariff announcement undid much of that

optimism.

"It's almost as if Trump wants to remind markets who is in

control, after nominating Scott Bessent as Treasury Sec - a man

markets expected to cool Trump's potency," said Matt Simpson,

senior market analyst at City Index.

"With the Canadian dollar rising against the Mexican peso,

markets are assuming this will hit Mexico the hardest."

DOLLAR BOUNCES

The dollar jumped as much as 2.3% to 20.75 Mexican pesos

and was last up 1.7% on the day and rose 1% against the

Canadian dollar to C$1.4139.

It strengthened 0.3% to 7.2674 yuan in offshore trading

, after earlier reaching the highest since late July at

7.2730 yuan.

"It was just last month that Trump said that 'the most

beautiful word in the dictionary is tariff', so there really

should not have been a surprise in Trump's intention, just in

the timing of the comments," said Sean Callow, a senior FX

analyst at ITC Markets.

"The fall in trade-sensitive currencies makes sense, and

should persist near term."

Trump said in a post on Truth Social that on his first day

in office he would impose a 25% tariff on all products from

Mexico and Canada, and an additional 10% tariff on goods from

China, citing concerns over illegal immigration and the trade of

illicit drugs.

Trump has previously threatened to slap tariffs on Chinese

imports in excess of 60%.

"Our view remains that tariffs will eventually not end up as

bad as feared, but we will see increased uncertainty over the

coming months. Waking up to check the tweets for any policy

announcements could become the norm," Jefferies strategist Mohit

Kumar said.

The euro fell 0.1% to $1.04838, while sterling

eased 0.2% to $1.2548.

At the same time, the dollar weakened 0.3% to 153.66 yen

, after initially strengthening following Trump's

tariff remarks.

The dollar-yen pair tends to track long-term U.S. Treasury

yields, which ticked up about 3.7 basis points to

4.3% in Europe, after Monday's 15 basis-point fall.

Bitcoin fell 1% to $92,781, easing further from last

week's record high at $99,830. The token has benefited from

speculation of an easier regulatory environment for

cryptocurrencies under Trump.

Gold succumbed to the dollar's strength, dipping to a

one-week low of $2,604.99.

Oil prices recovered slightly from the previous session's

2.8% drop as investors mulled the implications of a potential

ceasefire between Israel and Hezbollah.

Brent crude futures rose 0.6% to $73.41 a barrel,

while U.S. West Texas Intermediate crude futures rose

0.45% to $69.25 a barrel.

(Additional reporting by Kevin Buckland in Tokyo and Ankur

Banerjee in Singapore; Additional reporting by Stella Qiu;

Editing by Jacqueline Wong and Bernadette Baum)