* STOXX 600 down 1 pct, Germany’s DAX down 1.4 pct
* Dollar eases from 3-wk highs, euro subdued
* Oil pressured by oversupply fears, trade war
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh (Adds context, updates figures)
By Tom Finn
LONDON, June 18 (Reuters) - Global stocks slid on Monday and U.S. oil prices slumped after U.S. President Donald Trump announced tariffs on Chinese goods and Beijing responded with similar measures in an escalating trade dispute.
Fears the spat between the world’s two largest economies could intensify added to pressure on oil prices, which extended Friday’s big fall into the start of week, while the dollar retreated from a seven-month high against a basket of currencies.
The MSCI world equity index, which tracks shares in 47 countries, fell 0.3 percent, nearing a seven-day low.
Trump announced tariffs on Friday on $50 billion of Chinese imports, including cars, starting on July 6.
China said it would retaliate immediately by slapping duties on American export products, including crude oil, and suspend all previous trade agreements with Trump’s administration.
The exchange of blows between Washington and Beijing has heightened fears of a protracted dispute that could hurt global growth and particularly Europe, given that Trump has signalled he wants to impose tariffs on automotive exports.
Those concerns saw European bourses start the week in the red, after Asian shares fell early on Monday to a 2-1/2 week low.
Futures on main euro zone benchmarks were trading down 0.2-0.5 percent as investor angst about the outlook for economic growth filtered through to European stocks.
The pan-regional STOXX 600 was on track to relinquish gains recorded on Thursday when a dovish European Central Bank pushed back expectations for an interest rate hike.
Germany’s DAX was down 1.36 percent while France’s CAC 40 declined 1.23 percent.
“This all shows how quickly trade tensions could escalate between the U.S. and China,” said Derek Halpenny, European head of global markets research at MUFG Bank.
“It may not be the end of the matter as U.S. officials are looking at another $100 billion of Chinese imports on which they could impose tariffs if desired,” he said.
A potentially destabilising vote in German Chancellor Angela Merkel’s governing coalition partner over a migration plan weighed on the euro and could put further pressure on European shares.
In commodity markets, Brent crude futures fell to a six-week low of $72.45 a barrel on Monday after reports that top suppliers Saudi Arabia and Russia would likely agree to increase production at the June 22 OPEC meeting in Vienna.
U.S. light crude oil hit a two-month low of $63.59 a barrel before recovering somewhat to trade at $64.72, down 30 cents, by 1100 GMT.
The producer cartel of the Organisation of the Petroleum Exporting Countries (OPEC), which is de facto led by Saudi Arabia, and some allies including Russia have been restricting output since the start of 2017.
They will meet in Vienna on June 22 to decide future production policy.
China has hiked its list of U.S. goods on which it said it would slap tariffs six-fold from a version released in April, but the value was kept at $50 billion, as some high-value items such as commercial aircraft were deleted.
Some analysts, however, believe there is still room for compromise, suspecting Trump’s announcement was a negotiating tactic to wring faster concessions from Beijing.
Analysts also say the direct impact of the tariffs may be limited, especially for the U.S. economy, which is in decent shape.
The immediate fallout from the dispute was limited in currency markets although the escalation appeared to encourage some risk aversion as the safe haven Japanese yen recovered from three week lows against the dollar.
A mild reaction in the dollar suggested that the exchange of blows was anticipated in some markets.
The dollar index versus a basket of six major currencies crept down 0.1 percent to 94.729.
The index remained close to 95.131, though, a peak scaled on Friday, thanks to the dollar soaring more than 1 percent last week after the U.S. Federal Reserve gave a hawkish signal on interest rates while the European Central Bank struck a dovish tone.
The euro traded at $1.6165, not far from a recent two-week low of $1.1543 after the European Central Bank suggested it would hold off raising interest rates through the summer of next year.
The Australian dollar, a liquid hedge for risk, slipped to a six-week trough while its New Zealand cousin fell to the lowest since end-May.
Asian trade-reliant economies and companies plugged into China’s supply chains are worried that they will suffer collateral damage if world trade slows down, hurting global growth and dampening business confidence.
“There are trade frictions not only between the U.S. and China but also between the U.S. and its allies. Trump could put more pressure on other countries like Japan and NATO courtiers,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.
“So far investors have been escaping to high-tech shares and small cap shares. After all, money is still abundant. But investors should be cautious.” (Additional reporting by Hideyuki Sano in Tokyo; Editing by Adrian Croft and Richard Balmforth)