*

Stocks extend global selloff on Trump's tariffs

*

Japanese banks hard hit

*

Investors fear U.S. recession, ramp up bets on Fed rate

cuts

*

Safe-haven assets rise, gold near record high

(Updates to Asia afternoon)

By Rae Wee

SINGAPORE, April 4 (Reuters) - Japanese banks tanked on

Friday and stocks globally extended a punishing selloff in the

wake of U.S. President Donald Trump's sweeping tariffs, helping

drive a rally in U.S. Treasuries and supporting gold near a

record peak.

Benchmark 10-year U.S. Treasury yields slid under 4% and

traders priced in more than 100 basis points of Federal Reserve

rate cuts this year after Washington's steepest trade barriers

in more than 100 years stoked fears of a global recession.

A rush into Japanese government bonds (JGBs) caused

yields there to plunge to what could be their biggest weekly

drop in three decades, as worries about recession turned to a

manic bid for safety.

"If the current slate of tariffs holds, a Q2 or Q3 recession

is very possible, as is a bear market," said David Bahnsen,

chief investment officer at The Bahnsen Group.

"The question is, does President Trump seek some sort of

off-ramp for these policies if and when we see a bear market in

the stock market. We believe Trump will then pivot to focus on

the number of companies that are making significant investments

in the U.S., but it's unclear that would reverse market

sentiment."

It was a sea of red in Asia, even with markets in China,

Hong Kong and Taiwan closed for a holiday, with indexes in Tokyo

among the largest losers.

The Nikkei sank more than 4% and was set for a

weekly decline nearing 10%, the sharpest drop in more than five

years.

The rout was led by banking stocks, as the spectre of

Trump's tariffs and their potential impact on economic growth

stoked speculation that the Bank of Japan (BOJ) may need to

delay raising interest rates.

The banking index dived 11%, making it the worst

performer and triggering circuit breakers.

"Banks in Japan are caught in the crossfire of waning

rate-hike expectations coinciding with the market coming to

terms with increased chances of a global recession," said Jon

Withaar, who manages an Asia special situations hedge fund at

Pictet Asset Management.

Trump's latest tariff salvo has sparked an investor stampede

for safe havens such as government bonds, the yen and gold as

they hastily dumped risk assets.

S&P 500 companies lost a combined $2.4 trillion in stock

market value overnight, their biggest one-day loss since the

coronavirus pandemic hit global markets on March 16, 2020, while

other Wall Street indexes similarly suffered sharp falls.

The declines looked set to continue into Friday as U.S.

stock futures pointed to further weakness, with Nasdaq futures

sliding more than 1% while S&P 500 futures lost

0.9%. European futures showed weakness there would

persist.

U.S. Treasury yields slid as investors poured into the

safe-haven bonds. Bond yields move inversely to prices.

The benchmark 10-year Treasury yield struck a

six-month low of 3.9680%, while the two-year yield

bottomed at 3.6090%, also its lowest level since October.

"Central banks are not well-equipped to deal with

stagflation as the impacts of slower growth and higher inflation

pull policy in opposing directions," said David Doyle, head of

economics at Macquarie Group.

"This means that stronger core inflation is likely to limit

the extent of any policy response from the Fed due to the

headwinds created for growth."

Fed Chair Jerome Powell is due to speak later on Friday and

investors will be looking out for his latest assessment of the

U.S. economy and any clues on the policy outlook following

Trump's fresh tariff salvo.

In the foreign exchange market, the risk-sensitive

Australian and New Zealand dollars tumbled

more than 1% each.

The dollar was down nearly 0.5% against the yen at

145.41, having tumbled 2.2% in the previous session, its

steepest daily fall in more than two years. The euro

rose 0.39% to $1.1095 after a 1.9% jump on Thursday.

Against a basket of currencies, the dollar languished

near a six-month low at 101.60.

Elsewhere, spot gold was perched near a record high

at $3,103.97 an ounce and was on track for a fifth straight

weekly gain, as worries about the impact of Trump's tariffs on

the global economy boosted the metal's safe-haven appeal.

Oil, a proxy for economic activity, extended its

steep decline from the previous session.