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Asian stock markets : https://tmsnrt.rs/2zpUAr4

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Nikkei dives 4%, Nasdaq futures drop 1.4%

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Trump says US tariffs to cover all countries

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Flight to safety buoys bonds, gold hits record

(Updates prices to Asia afternoon)

By Wayne Cole

SYDNEY, March 31 (Reuters) - World share markets were

in a tailspin on Monday after U.S. President Donald Trump said

tariffs would essentially cover all countries, stoking worries a

global trade war could lead to recession.

Trump's comments to reporters on Air Force One seemed to

dash hopes the levies would be more limited. Trump is due to

receive tariff recommendations on Tuesday and announce initial

levels on Wednesday, followed by auto tariffs the day after.

Seeking any safe harbour from the trade storm, investors

piled into sovereign bonds and the Japanese yen, while lifting

gold prices to another all-time high.

S&P 500 futures lost 0.8%, extending Friday's

rout, while Nasdaq futures shed 1.4%.

EUROSTOXX 50 futures fell 0.8%, while FTSE

futures and DAX futures were both down 0.5%.

The European Union was ready to respond with tariffs of

its own, German Chancellor Olaf Scholz said on Sunday, but there

were also reports the block was preparing a list of concessions

to offer to Trump.

"For the first time in years, we find ourselves

genuinely worried about risk assets," said Ajay Rajadhyaksha,

head of rates markets at Barclays.

"If policy chaos and trade wars worsen much further, a

recession is now a realistic risk across major economies," he

added. "For the first time in many quarters, we favour core

fixed income over global equities."

Japan's Nikkei led the rout in Asia, losing an

eye-watering 4.1% to a six-month low as automaker stocks

continued to suffer fallout from Trump's talk of 25% tariffs on

imported cars.

MSCI's broadest index of Asia-Pacific shares outside Japan

shed 1.9% and South Korea 3.0%.

Chinese blue chips fell 1.0% as a survey showed

manufacturing activity inched higher in March, much as analysts

expected.

THAT "R" WORD

Many economists are worried that tariffs will hit the U.S.

economy hard, even while limiting the Federal Reserve's scope to

cut rates by also lifting inflation in the short term.

"Recession risks have become elevated - to a 40% probability

- on concerns that aggressive U.S. policies hit business and

household sentiment," warned Bruce Kasman, chief economist at

JPMorgan.

"With the latest tariff increases set to push U.S. core

inflation above 4% next quarter, a household sector with a

healthy balance will need to show a willingness to lower its

saving rate to cushion this blow."

Analysts at Goldman Sachs now saw a 35% chance of a U.S.

recession, up from 20% previously, saying they expected Trump to

announce reciprocal tariffs that average 15% across all U.S.

trading partners on April 2.

Data out on Friday underlined the risks as a key measure of

core inflation rose by more than expected in February while

consumer spending disappointed.

That raised the stakes for the March payrolls report due on

Friday where any outcome below the 140,000 gain expected would

only add to recession fears. Also due are a rush of surveys on

factories and services, along with figures on trade and job

openings.

Bond investors seemed to be betting the slowdown in U.S.

economic growth will outweigh a temporary lift in inflation and

prompt the Fed to cut rates by around 79 basis points this year.

This, combined with a flight from risk assets, saw 10-year

Treasury yields drop to 4.206% while two-year yields

hit 3.861%.

The outlook for rates could become clearer when Fed Chair

Jerome Powell speaks on Friday, following a host of other Fed

speakers this week.

The drop in yields saw the dollar ease 0.6% to 148,90 yen

, while the euro held at $1.0835. The dollar

index held at 103.880, having slipped for the previous

two sessions.

The perceived safety of gold saw the metal hit another

all-time high at $3,111 an ounce.

The risk of slower global growth was making itself felt on

oil prices, offsetting comments from Trump that he would impose

secondary tariffs of 25% to 50% on all Russian oil if he feels

Moscow is blocking his efforts to end the war in Ukraine.

Brent slipped 30 cents to $73.33 a barrel, while

U.S. crude dropped 31 cents to $69.05 per barrel.

(Editing by Shri Navaratnam and Lincoln Feast.)