* MSCI Asia-Pacific index down 0.75%, Nikkei loses 0.7%
* European stocks futures decline in early trade
* Washington determines China a currency manipulator
* Yuan still weak but retreat stalls on firmer-than-expected fix
* U.S. Treasury 10-year yield drops to lowest since Oct 2016
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Shinichi Saoshiro
TOKYO, Aug 6 (Reuters) - Global stocks extended already substantial losses on Tuesday, after Washington tagged China a currency manipulator, shaking fragile investor sentiment in a rapid escalation of the U.S.-China trade war.
Safe-haven assets, including bonds and some currencies such as the yen and Swiss franc, benefited as investors scurried to avoid risk.
In early European trade, the pan-region Euro Stoxx 50 futures STXEc1 were down 0.2%, German DAX futures FDXc1 slipped 0.15% and Britain's FTSE futures FFIc1 lost 0.4%.
U.S. Treasury Secretary Steven Mnuchin said on Monday the government had determined that China is manipulating its currency, and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing. labelling China a currency manipulator gives the United States a legitimate reason to take even more steps," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE:MS) Securities.
"The markets are now scrambling to factor in the possibility of the United States imposing not only an additional 10% of tariffs on Chinese imports, but the figure being raised to 25%. This is likely to be a protracted trade war without a quick resolution."
U.S. President Donald Trump vowed last week to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1, adding that it can be raised beyond 25%. Some economists reckon the global economy could slip into recession in the coming months if the tariff is increased to 25%.
The Trump administration's dramatic move against China hastened the risk aversion seen in global markets this week. On Monday, China let the yuan slide in response to the latest U.S. tariffs, which are expected to further aggravate trade tensions between the world's two largest economies. broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.75% after brushing its lowest since January. It has lost 3.7% so far this week.
The Shanghai Composite Index .SSEC retreated 1.4%.
Japan's Nikkei .N225 shed 0.7%, Australian stocks .AXJO fell 2.3% and South Korea's KOSPI .KS11 slid 0.9%.
"Hedge funds and other speculators who have bet on stocks have not finished closing down their positions yet. There will likely be another wave of selling in stocks," said Masanori Takada, cross asset strategist at Nomura Securities.
"The sudden surge in volatility is likely to prompt risk parity players to pull out possibly up to $20 billion from global stocks and buy bonds."
YUAN'S SLIDE STALLS
The onshore Chinese yuan CNY= fell to an 11-year low early on Tuesday, brushing 7.0699 per dollar.
In a symbolic move, Beijing let the yuan breach 7-per-dollar on Monday for the first time since late 2008. But the Chinese central bank's mid-point fixing on Tuesday of 6.9683 was firmer than market expectations, and the yuan's retreat slowed. offshore yuan stretched the previous day's slide, and briefly weakened to 7.1382 CNH=D4 , the lowest since international trading in the Chinese currency began in 2010. But it pulled back to 7.0469 after Beijing's firmer-than-expected yuan fixing on Tuesday.
The Japanese yen, a perceived safe-haven in times of market turmoil and political tensions, touched a seven-month high of 105.520 per dollar JPY= before dropping back to 106.700 in volatile trade.
The Swiss franc, another currency sought in times of turmoil, has gained roughly 1% against the dollar this week. It set a six-week peak of 0.9700 franc per dollar CHF= .
Investor demand for other safe-havens such government bonds also remained high as risk aversion gathered momentum.
The 10-year U.S. Treasury yield US10YT=RR extended sharp falls overnight and declined to 1.672%, its lowest since October 2016.
Japan's 10-year yield JP10YTN=JBTC fell to a three-year trough of minus 0.215%.
Brent crude oil futures LCOc1 plumbed a seven-month low of $59.07 per barrel as the trade war raised concerns about lower demand for commodities. Brent last traded at $60.41 for a gain of 1% as bargain hunting kicked in. O/R
Spot gold XAU= advanced to a six-year peak of $1,474.80 an ounce as investors sought the safety of the precious metal.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Onshore Chinese yuan
https://tmsnrt.rs/2MFqXZS World stocks and US 10-year yield
https://tmsnrt.rs/2MHiXYj
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