GLOBAL MARKETS-Oil, stocks slide on Trump's new trade salvo

(Updates to U.S. markets close)

* Trump threat of more China tariffs slams stocks

* Wall Street spirals lower in late trade

* Bond yields fall on weak U.S. jobs report, trade spat

By Herbert Lash

NEW YORK, April 6 (Reuters) - Crude oil and global equity

markets tumbled on Friday after U.S. President Donald Trump

upped the ante in a trade dispute with China, reviving investor

jitters about the impact a tariff war could have on the world

economy.

MSCI (Frankfurt: 3HM.F - news) 's gauge of worldwide equity markets fell more than 1

percent and stocks on Wall Street skidded more than 2 percent

after Trump threatened late on Thursday to add another $100

billion of tariffs on Chinese goods.

China warned it was fully prepared to respond with a "fierce

counter strike" of fresh trade measures if the United States

follows through on Trump's latest threat.

The U.S. equity rout picked up during a speech by Federal

Reserve Chairman Jerome Powell in Chicago on the U.S. economy.

Powell said it was too early to tell if the threatened tariffs

would materialize or the effect they might have.

"What Powell is signaling to market participants is that the

Fed is not swayed or rattled by equity market volatility at this

point. That's the reason for the additional selling pressure,"

said Chad Morganlander, a portfolio manager at Washington

Crossing Advisors in Florham Park, New Jersey.

"The Fed has the intestinal fortitude to wait until it

creeps into credit conditions and causes financial stress," he

said.

The pan-European FTSEurofirst 300 index , which

closed before Powell's speech, fell 0.4 percent but ended the

week 1.15 percent higher.

The STOXX Europe index of companies in 17 European

countries fell 0.35 percent, with the trade-exposed auto sector

the leading sectoral loser, down 1.7 percent.

Earlier in Asia, Japan's Nikkei nudged down slightly

to regain a measure of calm after an initial knee-jerk reaction

to Trump's latest tariff proposal.

Defensive stocks such as utilities or telecoms were among a

handful of European sectors to end the day in higher.

MSCI's all-country index of stock

performance in 47 countries fell 1.2 percent, led lower by

Apple (NasdaqGS: AAPL - news) , Microsoft (Euronext: MSF.NX - news) , Amazon.com (NasdaqGS: AMZN - news) and JPMorgan (LSE: JPIU.L - news) - the same as on the

benchmark S&P 500 index.

On Wall Street, the Dow Jones Industrial Average

closed down 572.46 points, or 2.34 percent, to 23,932.76. The

S&P 500 lost 58.37 points, or 2.19 percent, to 2,604.47

and the Nasdaq Composite dropped 161.44 points, or 2.28

percent, to 6,915.11.

The market's decline is due more to its current vulnerable

state than the prospect of a trade war, said Jim Paulsen, chief

investment strategist at The Leuthold Group in Minneapolis.

"It's got higher values; financial liquidity is contracting.

You came into the year with a little too much optimism. You got

rising rates going on, you got rising inflation fears," he said.

Powell said the U.S. central bank will likely need to keep

raising interest rates to keep inflation under control.

A weak U.S. unemployment report, which nonetheless

highlighted underlying labor market strength, helped push U.S.

Treasury prices higher as the economy created the fewest jobs in

six months in March.

Oil prices tumbled, with U.S. crude falling more than 2

percent.

Brent crude futures fell $1.22 to settle at $67.11 a

barrel, while U.S. West Texas Intermediate (WTI) crude

futures settled down $1.48 at $62.06.

U.S. Treasury and euro zone government bond yields dipped as

the trade spat raised the prospect of a full-blown trade war

between the world's two largest economies.

The yield on 10-year German government debt, the euro zone

benchmark, dipped 2.7 basis points in late trading to 0.494

percent, erasing much of Thursday's rise .

Benchmark 10-year notes last rose 15/32 in price

to push yields down to 2.7753 percent.

Mike Terwilliger, portfolio manager of Resource Liquid

Alternatives for the Resource Credit Income Fund, said nearly

every news event seems to register on the market's Richter

scale, though investors have been dealing with some relatively

weighty challenges this year.

"The recent decline in Treasuries is largely 'Tweet related'

versus some fundamental shift in the view of inflation or

economic growth," he said.

The dollar index fell 0.37 percent, with the euro

up 0.36 percent to $1.2282. The Japanese yen

firmed 0.45 percent at 106.90 per dollar.

U.S. gold futures for June delivery settled up 0.6

percent at $1,336.10 an ounce.

(Reporting by Herbert Lash; additional reporting by April

Joyner in New York; Editing by Dan Grebler)