GLOBAL MARKETS-Stocks slump, dollar soars as Trump tariffs trigger trade war fear

Updates with Hong Kong market open

By Kevin Buckland

TOKYO, Feb 3 (Reuters) - Asian stock markets slumped on Monday and U.S. equity futures pointed sharply lower after U.S. President Donald Trump's tariffs on Canada, Mexico and China triggered fears of a broad trade war and hit to global growth.

The U.S. dollar shot to a record peak against the Chinese yuan in offshore trading, and its highest against Canada's currency since 2003 and the strongest against the Mexican peso since 2022.

Japan's Nikkei share average .N225 tumbled as much as 2.3% in early trading, and Australia's benchmark .AXJO - which often functions as a proxy for Chinese markets - slumped more than 2%.

Stocks in Hong Kong, which include listings of Chinese companies, fell 1.9% after a Lunar New Year holiday. China's markets resume trading following the holidays on Wednesday.

Pan-European STOXX 50 futures STXEc1 sank 2.7%.

Trump followed through with threats to slap Canada and Mexico with duties of 25% and China with a 10% levy at the weekend, calling them necessary to combat the flow of migrants and fentanyl into the U.S..

Canada and Mexico immediately vowed retaliatory measures, and China said it would challenge Trump's levies at the World Trade Organization.

The tariffs, outlined in three executive orders, are due to take effect at 12:01 a.m. ET (0501 GMT) on Tuesday.

Trump's move was the first strike in what could usher in a destructive global trade war and drive a surge in U.S. inflation that would "come even faster and be larger than we initially expected," said Paul Ashworth of Capital Economics.

A model gauging the economic impact of Trump's tariff plan from EY chief economist Greg Daco suggests it would reduce U.S. economic growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in "stagflation" at home.

Barclays strategists previously estimated that the tariffs could create a 2.8% drag on S&P 500 company earnings, including the projected fallout from retaliatory measures from the targeted countries.

S&P 500 futures EScv1 slid 1.6%, after a 0.5% retreat for the cash index on Friday, when the White House reiterated Trump's plan to announce tariffs on Saturday. Nasdaq futures NQc1 slumped 2.2%, following Friday's 0.3% loss for the cash index.

The U.S. dollar was up 0.5% at 7.3538 yuan in the offshore market CNH=D3 in Asia, having earlier hit a record high of 7.3765. Onshore trading remains shut for holidays.

The U.S. currency climbed 2.8% to 21.2547 Mexican pesos MXN=, the highest since March 2022, and rose as much as 1.4% to C$1.4755 CAD=D3, a level not seen since 2003.

The euro EUR= dropped as much as 2.3% to $1.0125 - the lowest level since November 2022 as Europe potentially stands in Trump's tariff crosshairs.

U.S. two-year Treasury yields US2YT=RR rose as much as 3.6 basis points to 4.274%, a one-week high, on concerns tariffs will stoke U.S. inflation and delay interest-rate cuts.

Two-year Japanese government bond yields JP2YTN=JBTC rose in sympathy, reaching their highest levels since October 2008.

The cryptocurrency bitcoin BTC= tumbled to as low as $92,997.86, a three-week trough.

Oil prices rose, with U.S. West Texas Intermediate crude CLc1 up 1.8% at $73.81 a barrel and Brent crude futures LCOc1 adding 0.7% to $76.20 a barrel.

(Reporting by Kevin BucklandEditing by Shri Navaratnam)

((Kevin.Buckland@thomsonreuters.com;))