* World and European stocks down 0.2 pct
* Cohn's departure seen as tilting U.S. towardsprotectionism
* Dollar falls vs yen, Swiss franc; Canada dlr, Mexico pesofall
* Crude oil slips, gold extends rally amid risk aversion
* For a live blog on European stocks, type LIVE/ in an Eikonnewswindow
By Alasdair Pal
LONDON, March 7 (Reuters) - Global stocks and the dollarfell on Wednesday after a strong advocate of free trade resignedfrom the White House, fanning fears that U.S. President DonaldTrump will proceed with protectionist tariffs and risk a tradewar.
Economic adviser Gary Cohn, seen as a bulwark againstprotectionist forces within the Trump administration, said onTuesday he was leaving, sparking a global sell-off across anumber of major asset classes. world equity index .MIWD00000PUS , which tracksshares in 47 countries, was down 0.2 percent, having seen somestrength in Asian trading following news that South and NorthKorea would hold their first summit in more than a decade.
The pan-European Stoxx 600 .STOXX was down 0.4 percent,with Germany's DAX .GDAXI , home to many export-led companies,down 0.5 percent.
European car-makers .SXAP , which face the risk of a hikein import tariffs to the United States, were among the worstperformers, falling 1.1 percent.
Equity futures pointed to the U.S. S&P 500 index ESc1 opening 0.8 percent lower.
"The implication is that without the restraining influenceof Cohn on Trump, the president will now have a free hand topress ahead with further tariffs and generally up the ante ontrade," said Neil Wilson, an analyst at ETX Capital.
"This in itself does not bode well for risk despite thatsmall boost we saw on news that North Korea could considerde-nuking."
RISK AVERSION
Cohn's departure rippled through foreign exchange markets,with the U.S. dollar falling 0.4 percent and 0.2 percentrespectively against the Japanese yen JPY= and Swiss franc CHF= -- both seen as safe-havens in times of uncertainty.
The dollar is just off a 14-month low against the yen hit onFriday. worst outcome for financial markets, in terms ofpotential to create volatility, would be a confirmation ofrising trade friction and benign neglect of the dollar in theshort term," said analysts at ANZ.
The Canadian dollar CAD= and the Mexican peso MXN= bothretreated by around 0.5 percent against the dollar as Cohn'sdeparture was seen as raising risks that Washington could walkaway from NAFTA negotiations.
Other emerging market currencies that typically move insympathy with the dollar were lower, with the South African rand ZAR= and Russian rouble RUB= both down around 0.5 percentagainst the dollar.
Commodities fell on worries that trade friction could slowglobal growth, with Brent crude futures LCOc1 giving up theprevious day's gains to drop 1.2 percent.
Copper on the London Metal Exchange CMCU3 lost 0.9percent, paring a 1.4 percent gain from the previous session.
European government bonds DE10YT=RR rallied, with yieldsacross the euro zone falling by 1-3 basis points, followingsimilar strengthening in U.S. Treasuries US10YT=RR overnight.