August 1, 2019 / 6:57 PM / 25 days ago

REFILE-GLOBAL MARKETS-Trump's China tariffs rattle markets: stocks, oil tumble

(Replaces garbled material in final paragraph with copper price)

* USD falls, Euro and sterling earlier hit 2-1/2-year lows

* Emerging-market stocks on track for 7th session of losses

By Rodrigo Campos

NEW YORK, Aug 1 (Reuters) - U.S. President Donald Trump sent financial markets reeling on Thursday when he announced an additional 10% tariff on $300 billion in Chinese products would take effect next month.

A more than 1% gain in U.S. stocks evaporated within minutes, U.S. crude fell more than 8% and emerging market stocks tumbled to a six-week low.

The moves added to already heightened volatility in markets a day after the Federal Reserve cut interest rates for the first time in over a decade, in what was dubbed a "hawkish rate cut."

After the Fed lowered its benchmark rate by 25 basis points on Wednesday, Chairman Jerome Powell said that the central bank's first rate cut in over a decade was "not the beginning of a long series of rate cuts."

Trump said he was disappointed in Powell as the U.S. president had called for a more dovish stance at the Fed, but his tariff announcement had the effect he wanted on the outlook for interest rates. Traders are now pricing in two more interest rate cuts by year's end, and are increasing bets the Fed will need to ease policy further next year to offset risks from the escalating trade war.

"One thing that’s interesting is that after the Fed decision yesterday Trump tweeted in fairly short order his disapproval of it, and so he went outside of the lines to start a trade war," said Mazen Issa, senior foreign exchange strategist at TD Securities in New York.

The Dow Jones Industrial Average fell 197.12 points, or 0.73 percent, to 26,667.15, the S&P 500 lost 19.95 points, or 0.67 percent, to 2,960.43 and the Nasdaq Composite dropped 45.07 points, or 0.55 percent, to 8,130.35.

MSCI's gauge of stocks across the globe shed 0.55 percent.

Emerging market stocks lost 1.38%. Futures in Japan's Nikkei lost 1.59 percent.

The trade war between the world's two largest economies has been a lingering weight on oil prices, and the market sharply reversed its recent run-up in prices.

U.S. crude fell 7.39 percent to $54.25 per barrel and Brent was last at $60.90, down 6.38 percent on the day.

U.S. Treasury yields across all maturities fell sharply, with the benchmark 10-year note hitting its lowest since November 2016.

The 10-year note last rose 33/32 in price to yield 1.9072 percent, from 2.021 percent late on Wednesday.

Copper lost 1.05 percent to $5,865.00 a tonne.

Reporting by Rodrigo Campos, additional reporting by Richard Leong and Kate Duguid in New York and Ann Saphir in Washington; Editing by Susan Thomas and Dan Grebler

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