GLOBAL MARKETS-Stocks sink on trade fears as yuan slumps to a decade low

* Yuan drops below 7 per dollar
* Wall Street tumbles on renewed trade worries
* Yen, bonds and gold benefit
* Oil down as trade war concerns hit demand outlook

(Updates with U.S. market action, changes byline, dateline from
previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Aug 5 (Reuters) - Stock markets around the world
fell hard and the Chinese yuan weakened to an 11-year low on
Monday as fears of an escalation in the U.S.-China trade war
jolted financial markets.
China on Monday let the yuan CNY= tumble beyond the key
7-per-dollar level for the first time in more than a decade, in
a sign Beijing might be willing to tolerate further currency
weakness in the face of an escalating trade row with the United
States. Safe-haven assets, including the Japanese yen, government
bonds and gold rallied as investors sought to cut back on
riskier assets.
"I think there's a sense that President Trump might try and
escalate in terms of a reaction, if he thinks that this was a
deliberate move by the Chinese to try and weaken their currency
artificially,” said Brian Daingerfield, head of G10 fx strategy
for the Americas at NatWest Markets in Connecticut.
Against the Japanese yen, which investors tend to buy in
times of risk aversion, the U.S. dollar fell 0.38% to its lowest
since a January flash crash. JPY=
The sharp moves in financial markets come after U.S.
President Donald Trump stunned investors last week by vowing to
impose 10% tariffs on the remaining $300 billion of Chinese
imports from Sept. 1, abruptly breaking a brief month-long
ceasefire in the bruising trade war. On Monday, MSCI's All Country World Index .MIWD00000PUS ,
which tracks shares in 47 countries, extended its slide from
last week to dip 1.89% on the day, close to a two-month low.
On Wall Street, the main indexes fell sharply led by
technology companies. "Trade continues to trend in the wrong direction," said Ryan
Detrick, senior market strategist for LPL Financial in
Charlotte, North Carolina.
"Any hopes of a quick resolution with China are fading
quickly."
The Dow Jones Industrial Average .DJI fell 489.78 points,
or 1.85%, to 25,995.23, the S&P 500 .SPX lost 55.68 points, or
1.90%, to 2,876.37 and the Nasdaq Composite .IXIC dropped
200.40 points, or 2.5%, to 7,803.67.
The pan-European STOXX 600 index .STOXX fell 2.13%,
putting it on pace for its largest two-day decline in over three
years. .EU
Worries about a slowdown in global growth due to an extended
trade conflict hurt oil prices. "The escalation of trade measures only reinforces concerns
over global economic growth and hence by extension global oil
demand growth," said Harry Tchilinguirian, global oil strategist
at BNP Paribas in London.
Brent crude futures LCOc1 were down $1.53, or 2.47%, to
$60.36 per barrel, while U.S. West Texas Intermediate (WTI)
crude futures CLc1 were down 0.97 cents, or 1.74%, to $54.69 a
barrel.
Concerns about the outlook for trade lifted gold to a more
than six-year high on Monday. Spot gold XAU= was up 1.12% at
$1,456.55 per ounce. U.S. Treasury yields tumbled on Monday with 10-year yields
hitting their lowest level since November 2016, as fears over
escalation of trade U.S.-Chinese tensions renewed concerns about
an economic downturn, spurring safe-haven demand for bonds.
The yields on benchmark 10-year Treasury notes US10YT=RR
were down 8.8 basis points at 1.7667%.

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Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
EM currencies plunge https://tmsnrt.rs/2YoaWOZ
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