(Updates to US late afternoon)

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Stocks add to global selloff after China retaliates

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Traders ramp up bets on Fed, BoE, ECB rate cuts

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Live coverage of the latest developments on

tariffs

By Caroline Valetkevitch

NEW YORK, April 4 (Reuters) - Global stock markets and

oil prices tumbled again on Friday as China struck back against

U.S. President Donald Trump's tariffs and worries mounted about

a prolonged global trade war.

The Nasdaq Composite was headed toward a bear market, while

the pan-European STOXX 600 index confirmed it was in a

correction as the trade war fanned global recession concerns.

Since Trump unveiled his tariffs late on Wednesday, S&P 500

companies have lost over $4 trillion in stock market value, a

record two-day decline for the benchmark, exceeding a two-day

loss of $3.3 trillion in March 2020, when the pandemic ripped

across global markets, according to LSEG data compiled by

Reuters.

Some investors fled to the safety of government bonds, while

the dollar recovered from Thursday's weakness.

Responding to Trump's tariffs, China on Friday said it would

impose additional levies of 34% on American goods, confirming

investor fears that a full-blown global trade war is under way.

Trump slapped a 10% tariff on most U.S. imports and much

higher levies on dozens of countries, erecting the steepest

trade barriers in more than 100 years.

"It's sort of the worst fears of where the tariff program

was headed," said Rick Meckler, partner at Cherry Lane

Investments, a family investment office in New Vernon, New

Jersey.

"For those investors who were sure it was just a

negotiation - while that still may be true at some point - it's

getting awfully deeper into the detail and more dangerous for

companies."

Data showing the U.S. economy added far more jobs than

expected in March did little to brighten the mood.

Federal Reserve Chair Jerome Powell said in remarks at a

business journalists' conference in Arlington, Virginia, that

Trump's new tariffs are "larger than expected" and the economic

fallout, including higher inflation and slower growth, likely

will be as well.

He also said the U.S. central bank does not have a

prediction of a downturn in its outlook but he recognized

private-sector forecasters are shifting on that front.

"I think (Powell's) comments will be disappointing for those

who believe that the Fed is going to step in anytime soon," said

Peter Cardillo, chief market economist at Spartan Capital

Securities in New York.

Companies with exposure to China also fell. Apple ( AAPL ),

Nvidia ( NVDA ) and Amazon.com ( AMZN ) were all down sharply.

Bank shares dropped across the globe as fears of a recession

increased. The S&P 500 financial index was down 6.8%,

while energy was down more than 8% as oil prices fell.

The Dow Jones Industrial Average fell 1,953.69

points, or 4.78%, to 38,601.34, the S&P 500 lost 288.97

points, or 5.35%, to 5,107.55 and the Nasdaq Composite

fell 871.79 points, or 5.25%, to 15,678.81.

MSCI's gauge of stocks across the globe

dropped 41.22 points, or 5.1%, to 766.42.

The pan-European STOXX index closed 5.1% lower, its

biggest daily loss since the COVID-19-fuelled selloff in 2020.

The index fell nearly 12% from its March 3 all-time closing

high, confirming it was in correction territory.

Japan's Nikkei 225 fell 2.8% overnight for a second

session running.

Brent crude futures fell 6.5% to settle at $65.58.

U.S. crude futures lost 7.4% to settle at $61.99, the

lowest since April 2021.

The U.S. dollar recovered against the euro and yen, with

Powell signalling a cautious tone on future easing. The dollar

index was last up 0.9% after its biggest fall since

November 2022 on Thursday.

The euro was down 0.81% at $1.096. Against the

Japanese yen, the dollar strengthened 0.58% to 146.9.

After years of huge flows into U.S. stocks and a booming

American economy, investors are grappling with where to put

their cash.

That helped drive a powerful rush towards government bond

markets. The yield on the benchmark U.S. 10-year Treasury note

fell 12.2 basis points to 3.933% after falling to

a six-month low of 3.86%. Yields move inversely to prices.

The German 10-year bond yield, the benchmark for

the euro zone bloc, fell as much as 17 bps during the day.

Money market futures were pricing in cumulative rate cuts of

110 basis points from the Fed by the end of this year, compared

with about 75 bps a week earlier.

Traders increased their bets on Bank of England and European

Central Bank reductions too.

"A lot of investors I've talked to have just said in this

kind of environment, let's go to cash and just wait it out,"

Meckler said.