(Updates with closing U.S. market levels)

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German Bund futures fall on debt brake agreement

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New US tariffs on Canada, Mexico, China come into force

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Gold rises amid safe-haven demand

By Caroline Valetkevitch

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

on Tuesday as the United States hit Canada, Mexico and China

with steep tariffs, while the euro climbed to a three-month peak

against the U.S. dollar as German political parties agreed to a

500 billion euro infrastructure fund.

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

Mexico and Canada, along with doubled duties on Chinese goods,

took effect on Tuesday. China and Canada retaliated while

Mexican President Claudia Sheinbaum vowed to respond likewise,

without giving details.

The tariffs fueled investor worries about the impact on the

economy. A trade group representing nearly all major automakers

warned that new 25% tariffs on imports from Canada and Mexico

imposed by Trump will lead to drastic price hikes.

Jake Dollarhide, CEO of Longbow Asset Management in Tulsa,

Oklahoma, said one concern is what tariffs mean for the prices

of many items. "This economy has been driven by the consumer and

saved by the consumer," he said.

The Nasdaq ended down 9.3% from its record closing high on

December 16.

The Dow Jones Industrial Average fell 670.25 points,

or 1.55%, to 42,520.99, the S&P 500 fell 71.57 points, or

1.22%, to 5,778.15 and the Nasdaq Composite fell 65.03

points, or 0.35%, to 18,285.16.

MSCI's gauge of stocks across the globe fell

9.67 points, or 1.13%, to 846.14. The pan-European STOXX 600

index fell 2.14%.

"Trump's tit-for-tat approach has heightened fears of a

global trade war, pressuring risk assets while boosting safe

havens," said Uto Shinohara, senior investment strategist at

Mesirow in Chicago.

Gold prices rose amid the heightened safe-haven demand. Spot

gold was up 0.6% at $2,911.88 an ounce.

Germany's conservatives and Social Democrats announced

proposals to set up a 500 billion euro fund for infrastructure

and overhaul borrowing rules aimed at increasing defense

spending.

The euro rose to $1.0623, the highest since December 6.

Against the yen, the euro touched a two-week high. It was

last up 1.2% at 158.64 yen.

German Bund futures fell on the news out of

Germany, which came after the close of European markets. German

and European stocks are expected to open higher on Wednesday, as

futures, which had fallen earlier in the day on the U.S. tariff

worries, rose.

Longer-dated U.S. Treasury yields reversed earlier declines

on the news in Germany. The yield on the benchmark U.S. 10-year

Treasury note rose 2.6 basis points to 4.206%

after earlier falling to 4.106%, its lowest since October 21.

Investors also digested a Reuters report, citing people

familiar with the situation, that Trump's administration and

Ukraine plan to sign the much-debated minerals deal following a

disastrous Oval Office meeting Friday.

Oil prices settled close to multi-month lows after reports

of OPEC+ plans to proceed with output increases in April and

after the tariff news.

Brent futures settled 58 cents lower, or 0.8%, at

$71.04 a barrel. The session low was $69.75 a barrel, its lowest

since September.

U.S. West Texas Intermediate (WTI) crude fell 11

cents a barrel, or 0.2%, at $68.26. The benchmark previously

dropped to $66.77 a barrel, the lowest since November.