*

Europe's STOXX down, S&P futures dented by risk-off mood

*

Dollar down before jobs data, steel levies deadline

*

ECB seen cutting rates, BoC on hold

*

Oil bounces on relief OPEC did not raise output even

further

(Updates throughout with European trading)

By Wayne Cole and Amanda Cooper

SYDNEY/LONDON, June 2 (Reuters) -

Stocks and the dollar slipped on Monday as U.S.-China trade

tensions bubbled and investors turned defensive ahead of U.S.

jobs data and a widely expected cut in European interest rates.

Shares in Asian and European steelmakers, which export metal

to the United States, dropped in reaction to President Donald

Trump's threat late on Friday to double tariffs on imported

steel and aluminium to 50%, starting June 4. The move drew

criticism from European Union negotiators.

Speaking on Sunday, Treasury Secretary Scott Bessent said

Trump would soon speak with Chinese President Xi Jinping to iron

out a dispute over critical minerals.

Beijing then forcefully rejected Trump's trade criticism,

suggesting a call might be some time coming.

With tensions rising again over tariffs and trade, sentiment

looked fragile in Europe, where the STOXX 600 fell 0.5%

on the day and euro zone government bonds sold off, while the

euro benefited from an investor push out of dollar holdings.

"The flip-flopping on trade policy looks set to continue

and it appears the uncertainty this creates does not bother

President Trump at all. That is likely to give investors the

reason to renew selling of the U.S. dollar," MUFG strategist

Derek Halpenny said.

The dollar has lost 9% in value against a basket of six

major currencies so far this year. The index was last

down 0.6% on the day at 98.77.

White House officials also continued to play down a court

ruling that Trump had overstepped his authority by imposing

across-the-board duties on imports from U.S. trading partners.

Investors will be watching for signs to indicate whether

Trump will go ahead with the 50% tariff on Wednesday or back off

as he has often done before.

Safe-haven assets found plenty of demand on Monday, with the

likes of the Japanese yen and Swiss franc staging a robust

rally, as did gold.

There was some speculation about what Ukraine's astonishing

attack on Russian air bases might mean for peace talks resuming

on Monday.

In Poland, nationalist opposition candidate Karol Nawrocki

narrowly won a presidential election, delivering a major blow to

the centrist government's efforts to cement Warsaw's

pro-European orientation.

TARIFF TURBULENCE

In U.S. markets, S&P 500 futures fell 0.5%, while

Nasdaq futures lost 0.7%, suggesting a retreat at the

opening bell later. The S&P had climbed 6.2% in May, while the

Nasdaq rallied 9.6% on hopes that final import levies will be

far lower than the sky-high levels initially touted by Trump.

Front-running the tariffs has already caused wild swings in

the U.S. economy, with a contraction in the first quarter likely

turning into a jump this quarter as imports fall back.

The Atlanta Fed GDPNow estimate is running at an annualised

3.8% for April-June, though analysts assume this will slow

sharply in the second half of the year.

Data this week on U.S. manufacturing and jobs will offer a

timely reading on the pulse of activity, with payrolls seen

rising 130,000 in May while unemployment stays at 4.2%.

A rise in unemployment is one of the few developments that

could get the Federal Reserve to start thinking of easing again,

with investors having largely given up on a cut this month or

next.

A move in September is seen at around a 75% chance, though

Fed officials have stopped well short of endorsing such pricing.

Fed Governor Christopher Waller said on Monday that cuts

remain possible later this year as he saw downside risks to

economic activity and employment and upside risks to inflation

from the tariffs.

The Senate will this week start considering a

tax-and-spending bill that will add an estimated $3.8 trillion

to the federal government's $36.2 trillion in debt.

Across the Atlantic, the European Central Bank is considered

almost certain to cut its rates by a quarter point to 2.0% on

Thursday, while markets will be sensitive to guidance on the

chance of another move as early as July.

The Bank of Canada meets Wednesday and markets imply a 76%

chance it will hold rates at 2.75%, while sounding dovish on the

future given the tariff-fuelled risk of recession there.

On Monday, the dollar fell 0.8% on the yen to below 143

, and fell 0.6% to 0.8179 Swiss francs. The

euro was up 0.6% to $1.1423, the most since late

April.

In commodity markets, gold rallied nearly 2% to $3,353 an

ounce, having lost 1.9% last week.

Brent crude oil rose 2.4% to $64.25 a barrel after

OPEC+ decided to increase output in July by the same amount as

in each of the prior two months, a relief to some who had feared

an even bigger increase.