* Oil tumbles on slowing China demand, trade war
* Dow dips on trade fears, S&P 500 supported by tech stocks
* Dollar index falls after early gains
By Caroline Valetkevitch and Herbert Lash
NEW YORK, Aug 8 (Reuters) - Oil prices slumped on Wednesday after Chinese import data showed a slowdown in demand and weighed on world equity markets, which traded near break-even as U.S. technology shares extended recent gains.
China announced retaliatory trade tariffs in response to the United States' decision to impose 25 percent tariffs on another $16 billion of Chinese goods starting on Aug. 23.
Stock markets have maintained an upward trend amid sturdy corporate results and data despite a tit-for-tat U.S.-China trade row, with the U.S. benchmark S&P index closing on Tuesday less than half a percent off record highs set on Jan. 26.
The S&P traded slightly higher through most of the session on Wednesday but retreated at the close to barely in the red.
"The S&P and the stock market are telling you how important the tariffs are, and the market is close to making new highs," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.
"You've got full employment and wages are going up. Small business optimism is about the highest it's ever been. All of that is driving this."
European shares slid as disappointing earnings in the pharmaceutical sector weighed on sentiment already soured by the U.S.-Sino trade tensions.
Danish drugmaker Novo Nordisk was the biggest drag on MSCI's all-country world index, falling 6 percent, followed by Walt Disney Co, which missed estimates and was denied a request by China to screen "Christopher Robin" in the country, a source said.
The index of global stock performance closed 0.01 percent lower while in Europe, the pan-regional FTSEurofirst 300 index of leading shares closed down 0.20 percent.
Trade-sensitive industrial companies were the biggest drag on the Dow, which was down marginally. The decline was led Boeing and Caterpillar Inc.
The Dow Jones Industrial Average fell 45.16 points, or 0.18 percent, to 25,583.75. The S&P 500 lost 0.75 points, or 0.03 percent, to 2,857.7 and the Nasdaq Composite added 4.66 points, or 0.06 percent, to 7,888.33.
In the oil market, the U.S.-China trade fight weighed on prices. U.S. crude fell $2.23 to settle at $66.94 per barrel and Brent settled at $72.28, down $2.37 on the day.
China's crude imports recovered slightly in July after falling for the previous two months, but were still among the lowest this year due to a drop-off in demand from the country's smaller independent, or "teapot," refineries.
Retaliatory trade tariffs by China briefly boosted the dollar index, which rose as high as 95.417, near a more than one-year peak of 95.652 hit on July 19, before dropping back to trade lower on the day.
The dollar index fell 0.14 percent, with the euro up 0.13 percent to $1.1612. The Japanese yen firmed 0.37 percent versus the greenback at 110.97 per dollar.
Sterling dropped to its lowest levels in almost a year on concerns about Britain's exit from the European Union.
The pound dropped 0.34 percent to 1.2893 as investors ramped up bets on Britain leaving the EU without an agreement with Brussels.
U.S. Treasury yields were slightly lower after the government's record $26 billion sale of 10-year notes, the second leg of this week's $78 billion in quarterly refunding.
The 10-year auction followed mediocre demand for $34 billion worth of 3-year debt on Tuesday.
Benchmark 10-year notes fell 1/32 in price to yield 2.9674 percent.
Additional reporting by Sujata Rao in London, Hideyuki Sano in Tokyo; Editing by Cynthia Osterman and Phil Berlowitz