US STOCKS-Futures sink as Trump tests positive for COVID-19

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* Futures off: Dow 1.25%, S&P 1.36%, Nasdaq 1.86% (Adds comments, details)

Oct 2 (Reuters) - U.S. stock index futures tumbled on Friday after President Donald Trump tested positive for COVID-19 weeks before the election, with Washington’s failure to reach a new fiscal stimulus deal also hurting sentiment.

Trump’s tweet that he and first lady Melania had tested positive rankled global financial markets and sent investors scurrying to the perceived safety of the dollar, yen and gold.

Analysts said the news had the potential to hurt Trump’s campaigning ability at a time when equity markets were already nervous after a chaotic presidential debate between Trump and Democratic challenger Joe Biden heightened fears of a messy transfer of power.

“If Trump’s symptoms are mild and he stages a quick recovery, his support could increase,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.

“However, this does damage Trump’s ability to campaign and time is running out before the election. Whether it’s Trump or Biden, the biggest problem is uncertainty. As long as we’re uncertain about who will win the election, it is difficult for markets to truly settle.”

Trading in U.S. stocks was choppy in the last month as economic data indicated a long road to pre-pandemic levels and Congress deliberated over the next round of fiscal stimulus.

With a bipartisan deal eluding House Speaker Nancy Pelosi and the White House, the U.S. House of Representatives on Thursday approved a $2.2 trillion Democratic plan on fiscal aid, but objections from top Republicans are likely to doom the plan in the Senate.

Later in the day, investor attention will be on the Labor Department’s crucial jobs report, which is likely to show U.S. job growth slowing further in September. The report will be the last before the Nov. 3 election.

After Trump said he had coronavirus, online gambling site Betfair suspended betting on the outcome of the election. Betfair’s odds had previously shown Biden’s probability of winning at 60% on Wednesday.

At 6:53 a.m. ET, Dow e-minis were down 347 points, or 1.25%, S&P 500 e-minis were down 45.75 points, or 1.36%, and Nasdaq 100 e-minis were down 214.75 points, or 1.86%.

The CBOE volatility index, known as Wall Street’s fear gauge, shot up to a one-week high.

Big banks Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc, Wells Fargo & Co, and Bank of America Corp fell between 1.5% and 2.3%, tracking Treasury yields.

Tech heavyweights Facebook Inc, Apple Inc, Netflix Inc, Alphabet Inc, Microsoft Corp , Inc and chipmaker Nvidia Corp lost between 1.9% and 2.7%. (Reporting by Sagarika Jaisinghani and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)