* MSCI Asia-Pacific index down 1.4 pct, Nikkei sheds 2.25 pct
* Latest flare-up in US-China trade tensions take toll
* Dollar drops broadly after soft US jobs data
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Shinichi Saoshiro
TOKYO, Dec 10 (Reuters) - Global stocks extended their slump on Monday, with U.S. equity futures and Asian shares sliding on worries over slowing growth and fears that a fresh flare-up in tensions between Washington and Beijing could quash chances of a trade deal.
Traders returned from the weekend to face a growing wall of worry, with the world’s largest economies — the United States, China and Japan — all reporting weaker-than-expected data which pointed to moderating activity.
Investors were also bracing for a Tuesday vote on British Prime Minister Theresa May’s European Union divorce deal, which looks set to be rejected by parliament, raising fears of a chaotic exit in March.
S&P futures fell 0.8 percent and Dow futures lost 0.8 percent in the Asian day.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.4 percent to a near three-week low.
The Shanghai Composite Index retreated 0.8 percent. Australian stocks lost 2 percent, brushing its lowest level since December 2016, and South Korea’s KOSPI fell 1.1 percent.
Japan’s Nikkei shed 2.3 percent. Data early in the session showed the economy contracted the most in over four years in the third quarter as companies cut capital spending amid uncertainty over global demand and trade tensions.
U.S.-China trade negotiations need to reach a successful end by March 1 or Washington will impose new tariffs, U.S. Trade Representative Robert Lighthizer said on Sunday, clarifying there is a “hard deadline” after a week of seeming confusion among President Donald Trump and his advisers.
Markets were already reeling on news that Canadian officials had arrested the chief financial officer of Chinese smartphone maker Huawei for extradition to the United States. The arrest was seen as an added threat to the resolution of a trade war between the world’s top two economies.
Wall Street’s main indexes fell more than 2 percent on Friday in a broad sell-off, posting their largest weekly percentage drops since March.
“The biggest concerns for equity markets currently is the U.S.-China trade conflict and the Huawei incident,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.
“The trade theme will preoccupy the markets through the 90-day truce period between the United States and China, waiting for any signs of concession between the parties.”
Trump and Chinese President Xi Jinping early this month agreed to a temporary truce that delayed a planned Jan. 1. U.S. tariff hike while the two sides negotiate.
While U.S. officials say the Huawei arrest was a legal matter and not linked to the trade dispute, the move is expected to complicate trade talks.
“Even though President Trump said the incident will not derail the talks, the markets should not underestimate the nationalism hype which may create the hurdle for China to make concessions,” wrote strategists at OCBC Bank.
The dollar was on the backfoot after Friday’s soft U.S. jobs report raised worries that economic growth has peaked and the Federal Reserve may pause its rate tightening cycle sooner than previously thought.
On Friday, the U.S. Labor Department said public and private employers hired 155,000 workers in November, fewer than the 200,000 forecast by economists polled by Reuters, while the jobless rate held at a 49-year low of 3.7 percent.
The dollar was down 0.4 percent at 112.30 yen and the euro added 0.5 percent to $1.1435. The dollar index against a basket of six major currencies dipped 0.1 percent to 96.397.
The pound was up 0.2 percent at $1.2753 despite the looming Brexit vote in parliament. It had lost 0.5 percent on Friday.
The Chinese yuan dipped following weak trade and inflation data over the weekend that added to worries about its slowing economy.
China reported far weaker than expected November exports and imports, underscoring faltering global and domestic demand and reinforcing views that Beijing will have to roll out more support and stimulus soon to keep the economy from cooling too fast.
Oil prices rose, extending gains from Friday when producer club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January.
Brent crude rose 0.8 percent to $62.13 per barrel. (Editing by Shri Navaratnam and Kim Coghill)