(Updates prices ahead of European market open)

*

New levies on Canada, Mexico, China went into force from

0501

GMT

*

Tech shares sold as equities drop across Asia; European

stock

futures slide

*

Treasury yields drop to lowest since October amid worries

about

US economy

*

Oil extends retreat on reports OPEC+ to proceed with

planned

output increase

By Kevin Buckland

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

slid on Tuesday in Asia with investors ducking for cover as new

U.S. tariffs on Canada, Mexico and China took effect,

threatening to escalate global trade tensions.

The risk-sensitive Australian dollar slid and crude oil

wallowed near 12-week lows, while bitcoin languished around

$86,000 after erasing the surge to the cusp of $95,000 that

started the week.

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

also firm as European leaders drew up a Ukraine peace plan to

present to Washington.

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

lost 0.5%.

Hong Kong's Hang Seng fell 0.4%. Mainland blue chips

eased 0.2%.

Asian equities tracked the biggest losses on Wall Street

this year from overnight, with the S&P 500 sliding 1.8%

and the tech-heavy Nasdaq dropping 2.6%.

However, U.S. futures pointed about 0.2% higher,

signalling the sell-off may peter out later in the global day.

Europe looked headed for a lower open though, with STOXX 50

futures pointing down 0.8%.

Investors turned sharply more risk averse after U.S.

President Donald Trump confirmed on Monday that 25% tariffs on

Canada and Mexico would go into effect from 0501 GMT on Tuesday,

along with a doubling of China levies to 20%.

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

economy as well, particularly amid a run of soft data in recent

weeks.

Those worries escalated on Monday with figures showing

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.

However, Asian stocks pared initial steep losses, finding

some comfort in the measured reaction from Trump's tariff

targets, although Beijing did immediately announce reciprocal

tariffs, as did Ottawa.

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, and the

Aussie sank to a one-month nadir.

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.

The euro was steady at $1.0484 after a 1.1% rally

on Monday. Sterling was stable at $1.2697 after a 1%

advance.

U.S. Treasury yields extended declines in Asian hours on

Tuesday, with the 10-year yield dropping to the

lowest since October at 4.115%.

Bitcoin changed hands at $84,220 as optimism about a

strategic U.S. cryptocurrency reserve quickly waned, a day after

Trump reignited hopes with a post on social media naming five

tokens, including bitcoin, to be part of the plan.

Gold ticked down 0.2% to $2,889 per ounce.

Crude oil extended declines from Monday, when both Brent and

WTI fell about 2% each to settle at the lowest levels since

early December amid reports OPEC+ will proceed with a planned

oil output increase in April.

Brent futures fell 0.9% to $70.97 a barrel, while

U.S. West Texas Intermediate crude futures fell 0.7% to

$67.87 a barrel.