(Updates prices throughout, adds China white paper, economist comment)
* Asian stock markets : tmsnrt.rs/2zpUAr4
* Markets in Japan, South Korea, China closed for holiday
* Investor focus on Sino-U.S. trade war, Brexit, Fed meeting
* U.S. tariffs on $200 bln Chinese imports came into effect Monday
* MSCI ex-Japan falls, E-Minis for U.S. stocks a tad weaker
By Swati Pandey
SYDNEY, Sept 24 (Reuters) - Asian shares stumbled in holiday-thinned trading on Monday as China's decision to cancel talks with the United States sparked fears of a protracted trade war, while oil rallied as Saudi Arabia ruled out increasing supplies to cool crude prices.
U.S. stock futures slipped 0.2 percent, while spreadbetters pointed to a subdued start for Europe with futures for Eurostoxx 50, Germany's Dax and London's FTSE all opening in the red.
MSCI's broadest index of Asia-Pacific shares outside Japan fell almost 1 percent. Hong Kong was the worst performer with its Hang Seng index down 1.7 percent. Share markets in major Asian centres Japan, China and South Korea were closed for a holiday on Monday, while currency markets were subdued as banks in those countries were shut.
Investors were squarely focused on the Sino-U.S. trade war as China added $60 billion of U.S. products to its import tariff list, retaliating against U.S. duties on $200 billion of Chinese goods that came into effect at 0401 GMT Monday.
China also cancelled mid-level trade talks with the United States, as well as a proposed visit to Washington by Vice Premier Liu He which had been scheduled for this week, the Wall Street Journal reported.
Soon after the duties went into effect, China accused the United States of engaging in "trade bullyism", the official Xinhua news agency said. Xinhua cited a white paper on the trade dispute published by the State Council to say China was willing to restart negotiations with the United States in an "equal and mutually beneficial context."
"This shows China will not hold talks under tariff threats," said Frances Cheung, head of Asia macro-strategy for Westpac.
"If the United States is using threat as a tactic, it does not seem to work," Cheung added. "Markets have low expectation that a deal can be reached before U.S. mid-term elections."
The intensifying dispute between the world's two biggest economies has spooked financial markets worried about the impact on global growth.
The Japanese yen, which sees fund inflows during times of crisis, held above a recent two-month trough at 112.6 per dollar while the trade-sensitive Australian dollar slipped from a 3-1/2 week top to $0.7263.
"Both the U.S. and China are digging in, and increasingly the subtext seems to be as much about advancing a trade ideology as it is about rescinding trade tariffs," said John Bilton, head of global multi-asset strategy at JPMorgan Asset Management.
"As a result, both the extent and depth of any economic impact are being recalibrated," Bilton said.
"So while we continue to be constructive on the global economy over the coming quarters, it is hard to see the current surge in U.S. activity morphing into another period of coordinated global growth."
Britain's negotiation with European Union will be another key issue for investors, with risks of a 'no deal' or 'hard Brexit' shooting up again.
On Friday, British Prime Minister Theresa May said talks with the European Union had hit an impasse after the bloc's leaders rejected her "Chequers" plan without fully explaining why. Opposition leader Jeremy Corbyn said on Sunday he would back a second Brexit referendum if his Labour Party votes to pursue the move, heaping more pressure on May, amid speculation that she could opt to call a snap general elections.
The pound last at $1.3072, slightly above Friday's $1.3053 which was the lowest since mid-September.
The euro eased from a three-month peak on Monday to last trade at $1.1733.
The dollar index, which measures the greenback against a basket of major currencies, was last at 94.315 to edge above its weakest point since early July touched on Friday.
Late last week, the dollar was hammered as investors ramped up bets that the U.S. Federal Reserve will be near the end of its rate-hike cycle after an expected increase this week.
Oil prices gained as OPEC's leader Saudi Arabia and its biggest oil-producer ally outside the group Russia effectively rebuffed U.S. President Donald Trump's calls for action to lower prices.
Brent crude futures gained $1.60 to a four-month peak of $80.3 a barrel while U.S. crude futures shot up $1.3 to $72.10, a level not seen since early July.
Editing by Shri Navaratnam and Richard Borsuk