*

New levies on Canada, Mexico, China to go 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 slumped and bond

yields slid on Tuesday in Asia as investors braced for an

imminent escalation in a global trade war with new U.S. tariffs

on Canada, Mexico and China set to go into effect within hours.

The U.S. dollar remained depressed, with sterling holding

close to a 1 1/2-month high and the euro also firm as European

leaders drew up a Ukraine peace plan to present to Washington.

Crude oil wallowed near 12-week lows, and bitcoin languished

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

that started the week.

Tech stocks suffered particular selling pressure, pushing

Japan's Nikkei down 2.2% and Taiwan's benchmark

down 1.3%.

Hong Kong's Hang Seng fell 1.8%, with a subindex of

tech shares tumbling 2.9%. Mainland blue chips

lost 0.7%.

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 0.1% 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 sliding 1%.

Investors turned sharply more risk averse after U.S.

President Donald Trump said 25% tariffs on Canada and Mexico

will go into effect from 0501 GMT on Tuesday, along with a

doubling of China levies to 20%.

The Canadian dollar and Mexican peso tumbled, although

China's yuan bounced off its lowest level since February 13 in

offshore trading.

Investors were also concerned on 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.

Many investors and analysts remained optimistic though in

the medium term.

"I assume tariffs are going into effect, but they will not

remain in effect," said Tim Holland, chief investment officer at

Orion.

"Some agreements will be reached around border security and

some of the other issues the (Trump) administration has raised,"

he said. Until then, "we will have to live with the volatility

and uncertainty tied to political risk, and trade in

particular."

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%.

The U.S. dollar index edged to the lowest since

February 26 at 106.45.

The euro was steady at $1.0490 after a 1.1% rally

on Monday. Sterling was stable at $1.2705 after a 1%

advance.

The dollar dropped 0.5% to 148.71 yen.

However, it advanced 0.3% to 20.75 Mexican pesos,

extending Monday's 0.8% rise. The U.S. currency edged up 0.1% to

C$1.4489, after jumping to a one-month peak of C$1.4542 in the

previous session.

The yuan was up about 0.2% at 7.2927 per dollar

after weakening as far as 7.3078 on Monday.

Bitcoin changed hands at $85,468 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 $2,888 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 0.7% to $71.15 a barrel, while

U.S. West Texas Intermediate crude futures fell 0.4% to

$68.09 a barrel.