* Cohn's departure seen as tilting U.S. towards protectionism
* Dollar falls vs yen, Swiss franc; Canada dlr, Mexico peso fall
* U.S. stock futures down more than 1 pct
TOKYO, March 7 (Reuters) - U.S. stock futures and the dollar slumped on Wednesday after a key advocate for free trade in the White House announced his resignation, fanning fears President Donald Trump would go ahead with tariffs and risk a trade war.
White House economic adviser Gary Cohn, seen as a bulwark against protectionist forces within the Trump administration, said on Tuesday he was leaving.
S&P 500 futures dropped more than one percent in early Wednesday trade.
In the currency market, the dollar fell as much as 0.6 percent against the yen to 105.48 yen, near its 16-month low of 105.24 touched on Friday.
Against the Swiss franc, the dollar also shed 0.4 percent to 0.9365 franc, while the euro ticked 0.15 percent to $1.2422.
"The worst outcome for financial markets, in terms of potential to create volatility, would be a confirmation of rising trade friction and benign neglect of the dollar in the short term," said analysts at ANZ.
The Canadian dollar and the Mexican peso tumbled as Cohn's departure was seen as raising risks Washington could walk out of NAFTA.
The Canadian dollar fell 0.4 percent to C$1.2920 per dollar while the Mexican peso dropped 0.6 percent to 18.85 to the dollar.
Cohn's resignation poured cold water on a recovery in risk appetite following news on Tuesday that South Korea would hold its first summit with the North in more than a decade.
Reporting by Hideyuki Sano in Tokyo, Wayne Cole in Sydney; Editing by Sam Holmes