EMERGING MARKETS-FX, stocks tumble after Trump's tariffs shock global markets

By Purvi Agarwal

Feb 3 (Reuters) - Most emerging market assets slumped on Monday after U.S. President Donald Trump imposed his threatened tariffs on top trading partners, fanning fears of a global trade war which sent investors flocking to some safe-haven assets.

Trump on Saturday ordered sweeping tariffs on Mexican, Canadian and Chinese imports, with a hefty 25% on the U.S. neighbours and a 10% on goods from China, starting Tuesday.

The Mexican peso MXN=, which was volatile as investors gauged the likelihood of the tariffs, dropped 2% to its lowest level in nearly three years.

The offshore yuan CNH=D3 pared some losses after touching a record low of 7.3765 to the dollar, while Hong Kong stocks .HSI closed nearly flat.

Mexico and Canada immediately announced retaliatory tariffs, while China said it would challenge the order at the World Trade Organization.

Elsewhere, South African assets slumped after Trump said he would cut off funding for the country.

The rand ZAR= was last down 1.5%, while the benchmark 2030 government bond ZAR2030= tumbled and the yield rose 16.5 basis points to 9.22%. Its main stock index .JTOPI lost 1.3%.

Trump's "friendly" talks with China had earlier provided some relief as investors believed the U.S. could take a softer approach to tariffs.

However, the Feb. 1 move sparked worries of a global trade war, with investors globally selling stocks as they flocked to safe havens like the dollar and longer-dated U.S. Treasury bonds.

Dollar bonds issued in emerging market economies such as Egypt, Jordan and Kenya among others slipped.

"What the market has priced in here is the possibility of further tit-for-tat measures. If tariffs last for a longer period of time, that could lead to higher inflationary pressure and we'll start to see the U.S. 10-year Treasury yield inching up," said Kelvin Wong, senior market analyst at OANDA.

"That scenario will be very detrimental from a global liquidity tightening perspective, that could suck up some optimism from emerging markets."

MSCI's index tracking global EM currencies .MIEM00000CUS fell 0.5% to levels last seen two weeks ago, while the stocks gauge .MSCIEF fell 1.8%. Mainland Chinese markets were closed for a holiday.

Emerging Europe currencies weakened against the euro, with the Polish zloty EURPLN= declining 0.6%. The Czech crown EURCZK= and the Hungarian forint EURHUF= also dipped 0.2% each.

Regional stock indexes were broadly in the red, with ones in Poland .WIG20 and Hungary .BUX down 1.9% and 0.9% respectively.

The Turkish lira TRYTOM=D3 weakened 0.3% to another record low against the dollar. Data showed monthly inflation rate climbed more than expected in January.

HIGHLIGHTS:

** Trump says Americans may feel 'pain' in trade war with Mexico, Canada, China

** China to propose restoring 2020 'Phase 1' trade deal with US, WSJ reports

** India budget opts for economic sugar rush over reform

For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

(Reporting by Purvi Agarwal in Bengaluru; Editing by Varun H K)

((Purvi.Agarwal@thomsonreuters.com;))