(Updates with midday U.S. trading)
By David Randall
NEW YORK, Aug 9 (Reuters) - Signs of further escalation of the trade war between the United States and China and weak economic data from the United Kingdom weighed on global markets on Friday, capping a volatile week that has pushed gold to its highest level in six years.
Safe havens like U.S. Treasuries and the yen gained after a report that Washington was delaying a decision about allowing some trade between U.S. companies and China's Huawei again spooked Asian markets.
The prospect of snap elections in Italy brought down shares across Europe, while London's FTSE 100 index and the pound sank after Britain reported its economy shrank in the second quarter, the first contraction in seven years.
"It has been a very volatile week," said Elwin de Groot, Rabobank's head of macro strategy.
"Until recently, the markets' view was that this trade war will be resolved, but clearly now the thinking is that maybe this is not the case and it could be accelerating from here," he said.
MSCI's gauge of stocks across the globe shed 0.74% and was on pace for its second straight week of declines.
On Wall Street, the Dow Jones Industrial Average fell 217.94 points, or 0.83%, to 26,160.25, the S&P 500 lost 31.72 points, or 1.08%, to 2,906.37 and the Nasdaq Composite dropped 111.89 points, or 1.39%, to 7,927.27.
Each index is down more than 1% for the week.
Stocks accelerated their losses after President Donald Trump said he was "not ready" to make a deal with China and that the United States would continue to refrain from doing business with Chinese telecom Huawei Technologies.
"Until we get some sort of tangible answers to what the (Trump) administration is going to do with China, this is going to be an overhang on the market, creating plenty of sharp swings," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
Benchmark 10-year Treasury notes last rose 2/32 in price to yield 1.7103%, down from 1.715% late on Thursday.
The yen, meanwhile, rose as much as 0.4% against the dollar to 105.70 yen, nearly an eight-month high.
"The news about Huawei triggered the rise in the yen," said Junichi Ishikawawa, senior foreign exchange strategist at IG Securities. "This is a reminder that the U.S.-China trade dispute remains a risk, and this risk is not receding."
Gold rose above $1,500, its highest in more than six years, en route to its best week since April 2016.
"The trade spat is driving the market crazy," said Jigar Trivedi, commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers. "$1,500 (for gold) is now the new normal unless trade relations take a turn in a right direction."
Bank of America Merrilll Lynch noted that a massive $2.3 billion pile into gold funds over the last week had been the fourth-largest inflow ever.
Expectations of production cuts by OPEC pushed Brent crude back above $58 per barrel and U.S. West Texas Intermediate (WTI) past $53. Worries about the global economy have pushed Brent down 6% for the week and WTI more than 5%.
Reporting by David Randall; editing by Jonathan Oatis and Dan Grebler