San Francisco Frontiers - European stocks sink, gold hits high on escalating tariff fears

Asia's main equity indices closed mixed, while US equity futures were sharply down, indicating sizeable losses on Wall Street when it reopens after Monday's close because of the Martin Luther King holiday.

Gold, seen as a safe-haven investment, notched yet another record high, at $4,726.70 an ounce.

Silver also peaked, touching $95.51 an ounce.

The dollar retreated and key bond yields in the United States and elsewhere climbed.

"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.

When Wall Street reopens, the "Nasdaq looks set to chalk up the biggest declines amid concern about possible retaliatory action from Europe against America's big tech contingent", predicted AJ Bell investment director Russ Mould.

Frankfurt led losses in Europe, shedding 1.5 percent in midday deals. There were sizeable falls also in London and Paris.

After a bright start to the year fuelled by fresh hopes for the artificial intelligence sector, investors have taken fright since the US president ramped up his demands for the Danish autonomous territory, citing national security.

With Copenhagen and other European capitals pushing 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.

EU chief Ursula von der Leyen on Tuesday 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 the 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 over its intentions to decline his invitation to join his "Board of Peace" set up to oversee the rebuilding of Gaza.

- Key figures at around 1100 GMT -

London - FTSE 100: DOWN 1.2 percent at 10,075.62 points

Frankfurt - DAX: DOWN 1.5 percent at 24,578.77

Paris - CAC 40: DOWN 1.3 percent at 8,009.37

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)

New York - Dow: Closed Monday for holiday

Euro/dollar: UP at $1.1732 from $1.1641 on Monday

Pound/dollar: UP at $1.3478 from $1.3428

Dollar/yen: DOWN at 157.85 yen from 158.09 yen

Euro/pound: DOWN at 86.04 pence from 86.71 pence

Brent North Sea Crude: UP 0.4 percent at $64.18 per barrel

West Texas Intermediate: UP 0.4 percent at $59.56 per barrel

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R.Moore--SFF