By Rae Wee

SINGAPORE, April 4 (Reuters) - Japanese banks tanked on Friday and stocks globally extended a punishing selloff in the wake of U.S. President Donald Trump's sweeping tariffs, helping drive a rally in U.S. Treasuries and supporting gold near a record peak.

Benchmark 10-year U.S. Treasury yields slid under 4% and traders priced in more than 100 basis points of Federal Reserve rate cuts this year after Washington's steepest trade barriers in more than 100 years stoked fears of a global recession.

A rush into Japanese government bonds (JGBs) caused yields there to head for what could be their biggest weekly drop in three decades as growth worries turned to a manic bid for safety. JP/

"If the current slate of tariffs holds, a Q2 or Q3 recession is very possible, as is a bear market," said David Bahnsen, chief investment officer at The Bahnsen Group.

"The question is, does President Trump seek some sort of off-ramp for these policies if and when we see a bear market in the stock market. We believe Trump will then pivot to focus on the number of companies that are making significant investments in the U.S., but it's unclear that would reverse market sentiment."

It was a sea of red in Asia, even with markets in China, Hong Kong and Taiwan closed for a holiday.

Japanese shares were among the largest losers. The Nikkei .N225 was set for an eye-watering weekly decline of 9%, the sharpest drop in more than five years.

Their losses came on the heels of massive falls in U.S. banks overnight. Citigroup C.N fell over 12%, while Bank of America BAC.N sank 11%. Morgan Stanley MS.N, Goldman Sachs GS.N and Wells Fargo WFC.N fell over 9% each.

The rout in Japan was led by banking stocks, as the spectre of Trump's tariffs and their potential impact on economic growth stoked speculation that the Bank of Japan (BOJ) may need to delay raising interest rates. 0#JPYIRPR

The banking index .IBNKS.T dived 11% at one point, making it the worst performer and triggering circuit breakers.

"Banks in Japan are caught in the crossfire of waning rate-hike expectations coinciding with the market coming to terms with increased chances of a global recession," said Jon Withaar, who manages an Asia special situations hedge fund at Pictet Asset Management.

Trump's latest tariff salvo has sparked an investor stampede for safe havens such as government bonds, the yen and gold, as they hastily dumped risk assets.

S&P 500 companies lost a combined $2.4 trillion in stock market value overnight, their biggest one-day loss since the coronavirus pandemic hit global markets on March 16, 2020, while other Wall Street indexes similarly suffered sharp falls. .N

The declines looked set to continue into Friday as U.S. stock futures EScv1 pointed to further weakness. European futures STXEc1 showed weakness there would persist.

U.S. Treasury yields slid as investors poured into the safe-haven bonds. Bond yields move inversely to prices.

The benchmark 10-year Treasury yield US10YT=RR struck a six-month low of 3.9680%, while the two-year yield US2YT=RR bottomed at 3.6090%, also its lowest level since October. US/

"Central banks are not well-equipped to deal with stagflation as the impacts of slower growth and higher inflation pull policy in opposing directions," said David Doyle, head of economics at Macquarie Group.

"This means that stronger core inflation is likely to limit the extent of any policy response from the Fed due to the headwinds created for growth."

Fed Chair Jerome Powell is due to speak later on Friday and investors will be looking out for his latest assessment of the U.S. economy and any clues on the policy outlook following Trump's fresh tariff salvo.

In currency markets, the dollar fell 0.05% against the yen JPY=EBS to 146.03, having tumbled 2.2% in the previous session, its steepest daily fall in more than two years. The euro EUR=EBS rose 0.13% to $1.1065 after a 1.9% jump on Thursday.

Elsewhere, spot gold XAU= was not far from a record high at $3,101.35 an ounce and was on track for a fifth straight weekly gain, as worries about the impact of Trump's tariffs on the global economy boosted the metal's safe-haven appeal. GOL/

Oil LCOc1, a proxy for economic activity, extended its steep decline from the previous session. O/R

(Reporting by Rae Wee; Editing by Shri Navaratnam and Sam Holmes)

((Rae.Wee@thomsonreuters.com;))