Sawt Falasteen - Stock markets sink, dollar rallies on Trump tariffs

Wall Street's three main indices fell sharply in early deals.

The London, Paris and Frankfurt stock markets were in the red in afternoon trading as Trump warned that the European Union would be next in the firing line and did not rule out tariffs on Britain.

Shares in European automakers were hit particularly hard, with Volkswagen shedding 5.7 percent and Jeep maker Stellantis down more than six percent.

Asian stock markets finished mostly in the red.

"Investors fear that this trade war will result in a significant deterioration in the global economy," said John Plassard, investment specialist at Swiss asset manager Mirabaud.

There was also a sharp selloff across the cryptocurrency sector, with bitcoin slumping almost five percent.

Trump announced on Saturday 25 percent levies on imports from Canada and Mexico and 10 percent duties on Chinese goods.

The move "caught markets somewhat off guard, despite Trump's prior hints", said Daniela Sabin Hathorn, senior market analyst at brokerage Capital.com.

"The lack of a clear economic rationale behind this decision -- justified primarily as a measure to curb illegal immigration and fentanyl imports -- has unsettled investors," Sabin Hathorn said.

Oil prices jumped as the US leader imposed tariffs of 10 percent on Canadian oil imports.

The US dollar gained against major currencies, with the Mexican peso and Canadian dollar slumping against the greenback.

Analysts warn that the tariffs could fuel inflation and drag down economic growth.

Trump admitted that Americans may feel economic "pain" from his tariffs, but that it would be "worth the price".

China, Mexico and Canada are the top three US trade partners and have all vowed to retaliate when the tariffs take effect Tuesday.

David Morrison, senior analyst at financial services firm Trade Nation, said it was "painfully apparent" that most investors had believed that Trump's tariff threats had been a "negotiating tactic that would never be realised in full".

"They appear to be wrong," he said.

Trump said he would speak with the leaders of Mexico and Canada on Monday.

"With tariffs set to come in on Tuesday, there is a small window to come to some sort of accommodation. But President Trump has downplayed the chances of a deal before then," Morrison added.

Trump's tariff threats against Europe overshadowed a defence summit in Brussels on Monday.

"If we are attacked in terms of trade, Europe -- as a true power -- will have to stand up for itself and therefore react," French President Emmanuel Macron said as he arrived for the talks.

- Key figures around 1440 GMT -

New York - Dow: DOWN 1.1 percent at 44,063.53 points

New York - S&P 500: DOWN 1.4 percent at 5,959.08

New York - Nasdaq: DOWN 1.6 percent at 19,313.30

London - FTSE 100: DOWN 1.4 percent at 8,554.41

Paris - CAC 40: DOWN 1.5 percent at 7,830.07

Frankfurt - DAX: DOWN 1.7 percent at 21,366.38

Tokyo - Nikkei 225: DOWN 2.7 percent at 38,520.09 (close)

Hong Kong - Hang Seng Index: FLAT at 20,217.26 (close)

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.0255 from $1.0363 on Friday

Pound/dollar: DOWN at $1.2351 from $1.2392

Dollar/yen: DOWN at 154.49 yen from 155.18 yen

Euro/pound: DOWN at 83.03 pence from 83.59 pence

Brent North Sea Crude: UP 0.5 percent at $76.08 per barrel

West Texas Intermediate: UP 1.2 percent at $73.40 per barrel

U.AlSharif--SF-PST