* European shares follow Asia, NY lower on trade angst
* Beijing vows retaliation after USTR signals tariff hike
* Trump says China "broke the deal"; talks resume Thursday
* Asia, EM stocks at 2-month lows, SKorea sinks 3 percent
* European stocks near 6-week lows, safe-haven yen up
* Uber IPO pricing due later
* Copper near 3-month low, Turkish lira rocked again
* Asian stock markets: tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, May 9 (Reuters) - World shares tumbled for a fourth day running on Thursday after a warning from U.S. President Donald Trump that a long-worked-on trade deal with China was in serious danger.
Chinese Vice Premier Liu He was heading to Washington for two days of talks, but Trump's insistence that China "broke the deal" and Beijing's response that it would retaliate against a planned U.S. tariff increase raised the stakes.
Europe's main stock markets and Wall Street futures sank 0.5 to 1.3 percent after a torrid day for Asia saw more than 1.8 percent taken off China and more than 3 percent off South Korea, seen as the bellwether for the trade war.
Both countries' currencies were hit too, the won skidding to a more than two-year low and the yuan to a four-month trough, all of which sent the traditionally safe Japanese yen and U.S. and German bond prices higher.
"Markets remain on edge ahead of the Chinese vice premier’s visit to Washington," Rabobank analyst Bas van Geffen said.
"Doubt that this tariff increase can be avoided is growing," he added, as Goldman Sachs also raised its chances of a hike to 60 percent.
If talks do falter, Washington has said it will lift tariffs on $200 billion of Chinese goods to 25 percent from 10 percent at 12:01 a.m. ET (0401 GMT) on Friday.
Economists worry that would further slow the global economy and Kazuhiko Fuji, senior fellow at RIETI, a Japanese government-affiliated think-tank, said the outlook for the trade talks now looked fragile.
"I would suspect the U.S. will just hand China an ultimatum," he said. "No wonder the U.S. yield curve is almost inverting again."
The closely-watched curve - measuring the difference between the yields on different-length bonds - turned negative in late March, spooking investors who read the development as portending a recession.
The yield gap between three-month U.S. government bonds , at 2.42 percent, and benchmark 10-year notes was just 3 basis points, compared with about 15 basis points a few weeks ago.
Wall Street was expected to start 0.7-0.8 percent lower after a choppy day on Wednesday saw the Dow Jones nudge fractionally higher but the S&P 500 and Nasdaq drop 0.2 percent and 0.3 percent respectively.
As well as the trade headlines, traders will be closely watching the pricing on ride-hailing firm Uber's initial public offering which is set to be the biggest of the year so far and value it at up to $90 billion.
"In the event of a complete breakdown in (trade) talks and higher tariffs, we would expect this to see U.S. stocks trade 10–15 percent below their highs and a fall of around 15–20 percent in the Chinese market," Mark Haefele, global chief investment officer at Global Wealth Management at UBS, said.
In the currency market, the Japanese yen surged to a three-month high of 109.58 yen to the dollar before steadying, while China's yuan fell half a percent to hit a four-month low of 6.838 and notch its biggest four-day drop in a year.
Turkey's lira was taking blows again too, hitting an eight-month low as traders remained concerned about a decision to re-run Istanbul's mayoral election.
To squeeze supply and steady the currency, the country's central bank called off a funding auction on Thursday. It took similar action in March when the lira plunged before local elections, but that also created worries about trading it.
"These are all stop-gap measures, when the fundamental concern is that there is zero faith in Turkey's macro policy management at the moment," said BlueBay Asset Managment's Timothy Ash.
Sterling, meanwhile, was trying to brush off concerns that Brexit talks between Britain's government and the main opposition party may soon collapse to claw back above $1.30.
Commodity markets also felt the U.S.-China trade strains.
Brent crude futures dropped 0.6 percent to $69.92 a barrel, while U.S. West Texas Intermediate crude also retreated 0.6 percent to $61.75 despite a surprise fall in U.S. crude stockpiles..
Benchmark London copper hit its lowest in nearly three months, at $6,111 a tonne.
Additional reporting Tomo Uetake in Sydney, Noah Sin in Hong Kong; Editing by Dale Hudson and John Stonestreet