(Updates to late US morning)

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New U.S. tariffs on Canada, Mexico, China come into force

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Government bond yields down

By Caroline Valetkevitch

NEW YORK, March 4 (Reuters) - Major stock indexes were

sharply lower on Tuesday, with the Nasdaq Composite index down

10% from its December record high and Treasury yields also

declining as the United States hit Canada, Mexico and China with

steep tariffs, fueling investor worries about the impact on the

economy.

The S&P 500 was down more than 1%, while MSCI's gauge

of stocks across the globe dropped 13.14 points,

or 1.54%, to 842.67. The Nasdaq fell 10% from its record

high hit on December 16 into correction territory.

Wall Street's selloff was broad, with all of the major

sectors lower. Financials were down 3.9%, the most of

any of the sectors.

"The news cycle is spinning so fast and there is so much

going on. Tariffs were the final straw that broke the camel's

back. The market is throwing a temper tantrum," said Jake

Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

Tariffs add to concerns about higher prices for consumers,

he said. "This economy has been driven by the consumer and saved

by the consumer. This is about people's grocery bills going up,"

he said.

U.S. President Donald Trump's new 25% tariffs on imports

from Mexico and Canada and the doubling of duties on Chinese

imports could rattle nearly $2.2 trillion in annual trade with

the U.S.' three largest trading partners.

China immediately responded with 10%-15% tariffs on certain

U.S. imports from March 10 and a series of new export

restrictions for designated U.S. entities, while Canadian Prime

Minister Justin Trudeau said Ottawa was launching 25% tariffs on

C$30 billion ($20.72 billion) worth of U.S. imports.

The Dow Jones Industrial Average fell 764.08 points,

or 1.75%, to 42,434.53, the S&P 500 slid 99.56 points, or

1.68%, to 5,750.16 and the Nasdaq Composite dropped

258.57 points, or 1.39%, to 18,094.61.

The pan-European STOXX 600 index was down 2.2%.

Earlier in Asia, Japan's Nikkei fell 1.2% and Taiwan's

benchmark lost 0.7%.

Government bond yields fell. The yield on the benchmark U.S.

10-year Treasury note declined 3.8 basis points to

4.142% after falling to 4.115%, its lowest since October 21.

The dollar weakened to a three-month low, while investors

flocked to traditional safe-haven currencies the Japanese yen

and Swiss franc amid growth and tariff

worries.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

was down 0.32% at 106.20, with the euro up 0.4% at

$1.0528. Against the Japanese yen, the dollar weakened

0.65% to 148.55.

Other riskier assets lost ground too, with bitcoin

down 3.43% at $82,365.83.

Trump's address to the U.S. Congress later on Tuesday could

deliver further surprises, and investors are also anxious for

Friday's February nonfarm payrolls report.

Investors were also unnerved by Trump pausing military aid

to Ukraine following his clash in the Oval Office last Friday

with Ukrainian President Volodymyr Zelenskiy.

U.S. crude fell 1.46% to $67.37 a barrel and Brent

fell to $70.25 per barrel, down 1.91% on the day.

(Additional reporting by Tom Wilson in London and Kevin

Buckland in Tokyo; Additional reporting by Iain Withers; Editing

by Sonali Paul, Christina Fincher, Gareth Jones and Jan Harvey)