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US stocks down sharply with S&P 500 down more than 1%

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Dollar falls after Trump comments on China tariffs

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Yen still on track for losses for the week after political

changes

(Updates to late morning)

By Caroline Valetkevitch

NEW YORK, Oct 10 (Reuters) - Stock indexes fell sharply,

with the Nasdaq down more than 2%, while Treasury yields fell

and the U.S. dollar weakened on Friday after President Donald

Trump said he was weighing a "massive increase" in tariffs on

Chinese goods.

Trump said there was no reason to meet with China's President Xi

Jinping in two weeks in South Korea as planned, adding in a

Truth Social post that the U.S. is calculating a massive

increase in tariffs on Chinese imports.

"He's caught the market off guard again and thrown more

question marks into a market that is being questioned about a

very high degree of enthusiasm and being sort of scrutinized for

having too much fluff built into it," said Robert Pavlik, senior

portfolio manager at Dakota Wealth in Fairfield, Connecticut.

The Dow Jones Industrial Average fell 531.75 points,

or 1.15%, to 45,826.67, the S&P 500 fell 109.06 points,

or 1.62%, to 6,626.05 and the Nasdaq Composite fell

525.03 points, or 2.28%, to 22,496.64.

MSCI's gauge of stocks across the globe fell

14.33 points, or 1.44%, to 979.14.

The pan-European STOXX 600 index fell 1.22%.

The dollar index, which measures the greenback

against a basket of currencies, was down 0.46% at 98.93, with

the euro up 0.48% at $1.1618. Against the Japanese yen

, the dollar weakened 0.93% to151.65.

The yen was still headed for declines for the week against

the dollar following Japan's political changes and rate outlook

uncertainty.

The Japanese currency has dropped on concerns that the Bank

of Japan may not hike interest rates again this year after

fiscal dove Sanae Takaichi's surprise victory to lead the ruling

party.

Japanese Finance Minister Katsunobu Kato said on Friday that

the government was concerned about excessive volatility in the

foreign exchange market.

In France, President Emmanuel Macron welcomed mainstream

political leaders to a crunch meeting at the Elysee ahead of a

self-imposed late-Friday deadline to name a new prime minister.

In the U.S. Treasury market, the yield on benchmark U.S.

10-year notes fell 8.7 basis points to 4.061%, from

4.148% late on Thursday.

(Additional reporting by Marc Jones in London, Gregor Stuart

Hunter in Singapore and Purvi Agarwal; Editing by Susan Fenton

and Nick Zieminski)