June 25, 2018 / 5:11 PM / 5 months ago

US STOCKS-Wall Street pummeled by escalating trade row

* Tech stocks dive as U.S. plans limits on Chinese investment

* Harley Davidson sees extra costs due to EU tariffs, shares drop

* Oil drops after recent run-up, drags energy stocks lower

* Indexes down: Dow 1.48 pct, S&P 1.53 pct, Nasdaq 2.44 pct (Updates to early afternoon)

By Sruthi Shankar

June 25 (Reuters) - U.S. stocks sank in a broad sell-off on Monday, with the S&P 500 dropping more than 1.5 percent and technology firms bearing the brunt of an escalating trade dispute between the United States and other leading economies.

The U.S. Treasury Department was drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. technology firms, a government official said on Sunday. A Wall Street Journal report also said the U.S. planned to block additional technology exports to China.

U.S. Treasury Secretary Steven Mnuchin said the restrictions will not be specific to China but would apply "to all countries that are trying to steal our technology".

"Investors are now beginning to worry that this heated rhetoric is something that will last for a while and could actually lead to disruption of trade," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"They want to stick with equities, but rather hide out from areas most likely to be adversely affected by a pick up in trade tensions."

The S&P technology index dropped 2.8 percent, set for their biggest-one day plunge in three months. The Philadelphia Semiconductor index dropped 3.8 percent, with chipmakers taking a hit as they depend on China for a large part of their revenue.

The so-called FANG stocks — Facebook, Amazon , Netflix and Alphabet — tumbled between 3.2 percent and 6.6 percent, with investors taking profits after the four stocks hit record highs last week.

Harley-Davidson tumbled 5.8 percent after it forecast additional costs due to higher European Union tariffs on motorbikes imported from the United States.

At 12:55 p.m. ET, the Dow Jones Industrial Average was down 363.41 points, or 1.48 percent, at 24,217.48, the S&P 500 was down 42.17 points, or 1.53 percent, at 2,712.71 and the Nasdaq Composite was down 187.48 points, or 2.44 percent, at 7,505.34.

The CBOE Volatility index, known as Wall Street's fear gauge, spiked to 17.92, highest in two months.

Brent crude prices fell as traders factored in an expected output increase agreed at the OPEC meet on Friday. The S&P energy index was down 2.1 percent.

Campbell Soup was the biggest percentage gainer on the S&P 500, rising 10 percent after a New York Post report that Kraft Heinz was considering buying the company.

Declining issues outnumbered advancers for a 3.84-to-1 ratio on the NYSE and for a 3.94-to-1 ratio on the Nasdaq.

The S&P index recorded seven new 52-week highs and 17 new lows, while the Nasdaq recorded 45 new highs and 53 new lows. (Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

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