* Political tensions in U.S. and Europe drive stocks, yields down
* Dow slides as trade war worries weigh on industrials (Updates with afternoon trading)
By Nick Brown
NEW YORK, March 14 (Reuters) - Simmering political tensions roiled stocks and bonds across the globe on Wednesday, with U.S. yield curves continuing to flatten and stock markets losing ground as industrial companies took a beating.
Despite strong economic data out of China and the United States this week, stock markets could not shake a hangover from Tuesday's news that U.S. President Donald Trump was looking to impose tariffs on up to $60 billion of Chinese imports. also spooked investors on Tuesday by firing Secretary of State Rex Tillerson, who was viewed as a supporter of free trade. Together, those moves worried some investors about a global trade war.
On Wednesday, the Russian Foreign Ministry said it would retaliate after 23 of its were expelled by British Prime Minister Theresa May over a chemical attack on a former Russian double agent in England that May blamed on Moscow. helped continue a trend of flattening yield curves on U.S. government bonds, with the spread between two- and 10-year Treasury yields down 2.6 basis points to 55.7 basis points from Tuesday's close.
The spread between five- and 30-year yields was down 2.8 basis points to 55.7 basis points. 10-year U.S. Treasury notes US10YT=RR last rose 10/32 in price to yield 2.8116 percent, from 2.848 percent late on Tuesday.
The 30-year bond US30YT=RR last rose 30/32 in price to yield 3.0527 percent, from 3.101 percent Tuesday.
Germany's 10-year government bond yield DE10YT=RR fell to a 1-1/2-month low on trade war fears, while Italian borrowing costs rose after right-wing leader and aspiring prime minister Matteo Salvini reiterated his party's view that the euro was a flawed currency.
Salvini also said he was open to forming any sort of coalition government as long as it did not include the Democratic Party. comments, along with the ongoing trade war concerns, sent European stocks slightly into the red despite a banner day for Adidas (DE:ADSGN) and a strong showing for mining stocks.
Adidas, the German sports fashion company, gained more than 11 percent on Wednesday after announcing a share buyback of up to 3 billion euros.
But the pan-European FTSEurofirst 300 index .FTEU3 lost 0.14 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.42 percent.
On Wall Street, the Dow Jones was down around 1 percent, thanks in part to hefty losses at industrial companies like Boeing (NYSE:BA) BA.N , which had been down more than 4 percent before regaining some ground Wednesday afternoon. was despite encouraging economic news that had spurred the U.S. indexes to open higher on Wednesday morning.
China reported industrial output expanding at a surprisingly faster pace at the start of the year. Fixed asset investment also beat forecasts, while retail sales improved uncertainty outweighed that, said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "Given the rearrangement that Trump has made to his cabinet ... it's being read as a lot more protectionist now than it was two weeks ago."
The Dow Jones Industrial Average .DJI fell 238.52 points, or 0.95 percent, to 24,768.51, the S&P 500 .SPX lost 14.81 points, or 0.54 percent, to 2,750.5 and the Nasdaq Composite .IXIC dropped 14.93 points, or 0.2 percent, to 7,496.08.
Emerging market stocks .MSCIEF , meanwhile, lost 0.40 percent.
Oil prices were choppy, up slightly in the afternoon after losing ground through the morning.
U.S. crude CLcv1 rose 0.31 percent to $60.90 per barrel and Brent LCOcv1 was last at $64.82, up 0.28 percent.
The dollar index .DXY rose 0.06 percent, with the euro EUR= down 0.14 percent to $1.2372.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global trade and GDP growth
http://reut.rs/2FtPzhW China's trade with the United States
http://reut.rs/2h7NNMm Trump fires Tillerson, a moderate; replaces him with hawkish spy chief Pompeo
TREASURIES-Yield curve flattens as investors seek safe havens
Trade war threat drives demand for high-grade euro zone bonds
Adidas boost and strong miners keep European shares afloat
Trump seeking tariffs on up to $60 bln Chinese goods; targets tech, telecoms
Italian bond yields rise after League leader says euro not irreversible
Dow slides as trade war worries weigh on industrials