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Bund yields edge higher again after biggest jump since

1990s

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Euro hits new 4-month high after ECB cuts rates

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U.S. stocks lower in midday trading

(Updates to midday US trading)

By Caroline Valetkevitch

NEW YORK, March 6 (Reuters) - The euro touched a

four-month high against the U.S. dollar on Thursday after the

European Central Bank cut interest rates again as expected,

while stock indexes fell sharply as investors weighed the impact

of U.S. President Donald Trump's tariffs.

The global bond market selloff continued, a day after the

10-year German Bund yield saw its biggest rise since the 1990s.

U.S. President Donald Trump on Thursday said Mexico won't be

required to pay tariffs on any goods that fall under the United

States-Mexico-Canada Agreement on trade until April 2, but made

no mention of a reprieve for Canada despite his Commerce

Secretary saying a comparable exemption was likely.

Trump had imposed 25% U.S. tariffs on imports from Mexico

and Canada on Tuesday along with fresh duties on Chinese goods,

adding to worries about the impact on inflation and growth.

Oliver Pursche, senior vice president and advisor for

Wealthspire Advisors in Westport, Connecticut, said investors

are speculating over what could happen, and that is causing a

lot of market volatility.

"They fear the consequences of the actions being taken,

but we don't know what those consequences are yet," he said.

Adding to the negative tone, an index of chipmakers

was down 4% after a sales forecast from Marvell ( MRVL ) failed

to excite investors.

The Dow Jones Industrial Average fell 344.50

points, or 0.80%, to 42,662.21, the S&P 500 fell 78.80

points, or 1.35%, to 5,763.60 and the Nasdaq Composite

fell 323.94 points, or 1.74%, to 18,229.72.

MSCI's gauge of stocks across the globe fell

5.07 points, or 0.59%, to 853.64. The pan-European STOXX 600

index rose 0.13%.

Earlier, China's blue-chip index rose another 1.4%

while Hong Kong's Hang Seng Index surged over 3%,

touching its highest in three years and cementing a major world

market-topping 20% 2025 surge.

The single European currency rose 0.5% to $1.0848,

after earlier hitting a four-month high of $1.0854. The euro has

gained 4.5% so far this week, set for its biggest weekly jump

since May 2009.

The European Central Bank also said monetary policy was

becoming less restrictive, which traders took to mean another

cut in April might not be a given.

Ten-year German Bund yields were up 6 basis

points at 2.847%, having jumped as high as 2.929% on Wednesday.

German lawmakers are expected to debate a 500-billion-euro

infrastructure fund and sweeping changes to state borrowing

rules to fund defence from March 13.

Japan's 10-year government bond yield, had hit a near

16-year high, while the yield on benchmark U.S. 10-year notes

rose 4.4 basis points to 4.311%, from 4.267% late on

Wednesday.

Investors also weighed the latest batch of economic data for

signs of cracks in the economy ahead of Friday's government

payrolls report.

Weekly initial jobless claims fell by 21,000 to a seasonally

adjusted 221,000, according to the Labor Department, below

expectations of economists polled by Reuters of 235,000.

Also in focus were comments by European leaders, who said

they would stand by Ukraine and spend more on defense in a world

upended by Trump's reversal of U.S. policies. Trump's suspension

of military aid to Kyiv this week fanned fears the region can no

longer rely on U.S. protection in place since World War Two.

U.S. crude fell 0.65% to $65.86 a barrel and Brent

fell to $68.97 per barrel, down 0.46% on the day.