(Updates through close of U.S. trading)
By David Randall
NEW YORK, Oct 29 (Reuters) - Early gains on Wall Street fizzled and sent global stocks lower on Monday after reports that the U.S. is planning an additional $257 billion worth of tariffs on Chinese goods if upcoming talks between Presidents Donald Trump and Xi Jinping fail to end a trade war between two of the world's largest economies.
Additional tariffs on goods from China could be implemented as early as December, according to a Bloomberg report.
The Dow Jones Industrial Average fell 245.39 points, or 0.99 percent, to 24,442.92, the S&P 500 lost 17.44 points, or 0.66 percent, to 2,641.25 and the Nasdaq Composite dropped 116.92 points, or 1.63 percent, to 7,050.29.7,050.29
The Dow had shot up more than 300 points shortly after the opening of trade, and at one point in afternoon trading was down more than 500 points.
"Obviously, this trade skirmish is metastasizing potentially into something worse than it already is," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Many stock indexes are already in official correction territory - meaning down 10 percent from recent highs - as investors fret about corporate earnings and global economic growth.
The MSCI world equity index lost early gains to slide nearly 0.7 percent. The index is down nearly 10 percent so far this month and has shed $6.7 trillion in market value since its January peak.
Shares in Europe closed broadly higher following Standard & Poor's decision to leave Italy's sovereign rating unchanged, prompting relief that there was no ratings downgrade.
Europe's autos sector jumped 4.9 percent, its strongest day since August 2015, after a report that China was considering halving the tax on car purchases to boost demand for autos, which has suffered from a trade war and slowing economic growth.
Asian stock trading was dampened by China’s blue-chip index, which tumbled more than 3.3 percent. Chinese data underscored worries of a cooling economy, as profit growth at industrial firms slowed for the fifth consecutive month in September due to ebbing sales of raw materials and manufactured goods.
Analysts have been downgrading estimates for European earnings at the fastest pace since February 2016, and weak results from internet companies Amazon.com Inc and Alphabet Inc hurt U.S. stocks at the end of last week. Shares of Amazon.com lost more than 6 percent on Monday.
"The only way I can summarize the core sentiment among the European investors I met is something like 'pretty grim'," wrote Erik Nielsen, group chief economist at UniCredit, in a note to clients.
Benchmark 10-year notes last fell 3/32 in price to yield 3.0868 percent, from 3.076 percent late on Friday.
The dollar index rose 0.26 percent, with the euro down 0.15 percent to $1.1384.
U.S. crude fell 1.41 percent to $66.64 per barrel and Brent was last at $76.78, down 1.08 percent on the day.
Reporting by David Randall Editing by Susan Thomas, David Gregorio and Bill Berkrot