*

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

*

European stocks fall 1%

*

Government bond yields down

*

Tech shares sold as equities drop across Asia

*

Oil extends retreat

By Tom Wilson and Kevin Buckland

LONDON/TOKYO, March 4 (Reuters) - Stocks and bond yields

slid on Tuesday as investors globally ducked for cover after the

United States hit Canada, Mexico and China with steep tariffs,

launching new trade conflicts with the top three U.S. trading

partners.

European stocks slid 1%, falling back from record

highs, with shares of automakers, vulnerable to trade

duties, losing 3%. Aerospace and defence stocks hit a

record high, however.

Government bond yields fell. U.S. 10-year Treasury yields

dropped to their lowest since October at 4.115%,

while yields on German 10-year bonds, a benchmark for the euro

zone, also slid.

Other riskier assets lost ground too, with bitcoin slipping

under $84,000, erasing a surge at the start of the week. The

risk-sensitive Australian dollar fell, too.

MSCI world equity index, which tracks shares

in 47 countries, fell 0.2%.

Still, U.S. futures gained almost 0.3%, signalling

the sell-off may peter out globally. The S&P 500 is down

about 5% from its February 19 all-time closing high as tariffs

exacerbate concerns about growth.

Investors were also unnerved by U.S. President Donald Trump

pausing military aid to Ukraine following his clash with

Ukrainian President Volodymyr Zelenskiy last week, deepening the

fissure that has opened between the one-time allies.

"Everyone is caught by the onslaught. You have the news on

tariffs, the news on Ukraine," said Samy Chaar, chief economist

and chief investment officer for Switzerland at Lombard Odier, a

private bank in Geneva.

"It means that you create uncertainty, and when you have

that on markets, investors get back to base."

China swiftly retaliated against the tariffs, announcing on

Tuesday 10%-15% hikes to import levies covering a range of

American agricultural and food products.

In Asia, equities tracked the biggest losses on Wall Street

this year from overnight, where the S&P 500 slid 1.8% and

the tech-heavy Nasdaq dropped 2.6%.

Japan's Nikkei fell 1.6% and Taiwan's benchmark

lost 0.5%. Hong Kong's Hang Seng fell 0.4%.

Crude oil settled at the lowest levels since early December

amid reports OPEC+ will proceed with a planned oil output

increase in April. Brent futures fell 1.4% to $70.61 a

barrel.

U.S. FALLOUT?

Market players were concerned about the fallout for the U.S.

economy as well, especially given a run of soft data in recent

weeks.

Those worries escalated on Monday with figures showing U.S.

factory gate prices jumped to a nearly three-year high and

materials deliveries were taking longer, suggesting that tariffs

on imports could soon hamper production.

Higher China tariffs "will likely hurt the U.S. itself as it

needs cheap Chinese products to bring down inflation," said Wang

Zhuo, partner of Shanghai Zhuozhu Investment Management.

Likewise, "higher tariffs on U.S. agriculture products will

also negatively impact China", but countermeasures are

politically necessary "so it would be wise to make some symbolic

move without triggering an escalation in tensions", Wang said.

The Canadian dollar and Mexican peso weakened, while the

Aussie dollar sank to a one-month low.

However, China's yuan bounced off its lowest level since

February 13 in offshore trading with the People's Bank of China

continuing to guide the currency firmer via the official fixing.

Sterling held close to a 1 1/2-month high and the

euro was also firm after a 1% rally on Monday as

European leaders drew up a Ukraine peace plan to present to

Washington.

Bitcoin fell below $84,000 as optimism about a

so-called strategic U.S. cryptocurrency reserve quickly waned, a

day after Trump named five tokens, including bitcoin, to be part

of the plan.