Portugal Colonial - World stocks sink, gold hits high on escalating trade war fears

Wall Street opened sharply lower as the tech heavy Nasdaq gave up 1.7 percent minutes into the session while the Dow and the broader based S&P 500 shed 1.4 percent as traders began the week's US trading, following Monday's Martin Luther King holiday.

Europe's main markets also lost north of one percent during the day's trading while, earlier, Tokyo suffered a similar fate even though Asia overall closed mixed.

Gold, seen as a safe-haven investment, notched yet another record high, closing in on the $4,740 an ounce mark. Silver also peaked, touching $95.51 an ounce.

Key bond yields jumped on the heightened trade fears with the US 10-year Treasury note jumping around seven basis points to 4.29 percent while Japanese long-dated bond yields reached record highs.

Kathleen Brooks, research director at XTB, noted that banks and US tech "are at risk from EU tariffs" in response to Trump's tariff blitz and warned this would hurt US blue chips.

Tesla, Amazon and Nvidia were all showing losses of around 2.5 percent in early New York trading.

"Overall, this is a manmade crisis, and the continued sell off on Tuesday suggests that US threats to Greenland and their effects on financial markets could have further to go if the situation does not deescalate soon," Brooks opined.

"The US dollar is not serving as a safe haven because it seems to be entirely US-driven and raises fears about US policy and European exposure to US assets," noted Neil Wilson, investor strategist at Saxo UK.

After a bright start to the year fuelled by fresh hopes for the artificial intelligence sector, investors have taken fright since Trump ramped up his Greenland demands, on grounds of US "national security".

After European capitals pushed back, Trump on Saturday said he would impose 10 percent levies on eight countries -- including Denmark, France, Germany and Britain -- from February 1, lifting them to 25 percent on June 1.

- 'Mistake' -

The move has raised questions about the outlook for last year's US-EU trade deal, the ratification of which was frozen on Monday by the European Union parliament;

EU chief Ursula von der Leyen warned the United States that hitting allied European nations with punitive tariffs over Greenland would be a "mistake".

"The proposed additional tariffs are a mistake especially between long-standing allies," von der Leyen told Tuesday's Davos gathering in Switzerland.

"The European Union and the United States have agreed to a trade deal last July. And in politics as in business -- a deal is a deal. And when friends shake hands, it must mean something," she added.

US Treasury chief Scott Bessent on Monday said that any retaliatory EU tariffs would be "unwise".

Trump, meanwhile, ramped up his rhetoric against France on Tuesday, warning he would impose 200-percent tariffs on French wine and champagne because it was declining his invitation to join a "Board of Peace".

That body was originally conceived to oversee the rebuilding of Gaza but its charter gives it a much broader, global remit, with Trump in charge.

- Key figures at around 1445 GMT -

New York - Dow: DOWN 1.3 percent at 48,706.18 points

New York - S&P 500: DOWN 1.4 percent at 6,844.07

New York - Nasdaq Composite: DOWN 1.7 percent at 23,107.33

London - FTSE 100: DOWN 1.0 percent at 10,090.00 points

Frankfurt - DAX: DOWN 1.2 percent at 24,647.76

Paris - CAC 40: DOWN 1.0 percent at 8,025.30

Tokyo - Nikkei 225: DOWN 1.1 percent at 52,991.10 (close)

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 26,487.51 (close)

Shanghai - Composite: FLAT at 4,113.65 (close)

Euro/dollar: UP at $1.1729 from $1.1641 on Monday

Pound/dollar: UP at $1.3449 from $1.3428

Dollar/yen: DOWN at 157.89 yen from 158.09 yen

Euro/pound: UP at 87.19 pence from 86.71 pence

Brent North Sea Crude: UP 0.4 percent at $64.36 per barrel

West Texas Intermediate: UP 0.4 percent at $59.86 per barrel

burs-bcp/ajb/cw/rmb

N.Esteves--PC