Updates with closing US market levels

By Caroline Valetkevitch

NEW YORK, April 7 (Reuters) - Most major stock indexes ended a turbulent Monday lower as U.S. President Donald Trump showed no sign of easing up on his global trade war, while U.S. Treasury yields rebounded.

The European Union proposed counter-tariffs on Monday, while Trump threatened to add another 50% duty on U.S. imports from China on Wednesday if it did not withdraw its 34% retaliatory tariffs from last week.

U.S. stocks swung between heavy losses and gains throughout the session as investors digested changing headlines related to tariffs.

Stocks have fallen sharply since Trump unveiled sweeping tariffs late on Wednesday that investors worried could drive up inflation and push the global economy into recession.

The Cboe Volatility index .VIX rose to 46.98, its highest close since April 2020.

"You can tell shorts are on a hair trigger today, watching around every corner for a possible (Federal Reserve) intervention, tariff pause, or trade deal," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.

"It goes to show you just how short-lived this market rout is likely to be."

Traders bet the increasing risk of recession could prompt the Fed to cut interest rates as early as May. Futures markets are pricing in almost five quarter-point cuts in U.S. rates this year.

Rising costs will also put pressure on company profit margins, as the U.S. earnings reporting season begins later this week.

The White House denied a report that Trump is considering a 90-day pause in tariffs for all countries except China. The report, which the White House called "fake news," briefly turned U.S. stocks positive early in the session.

The Dow Jones Industrial Average .DJI fell 349.26 points, or 0.91%, to 37,965.60, the S&P 500 .SPX dropped 11.83 points, or 0.23%, to 5,062.25 and the Nasdaq Composite .IXIC rose 15.48 points, or 0.10%, to 15,603.26.

During the session, the S&P 500 went from a low of 4,835.04 to a high of 5,246.57.

MSCI's gauge of stocks across the globe .MIWD00000PUS fell 18.81 points, or 2.46%, to 745.48.

European shares also slumped, with the STOXX 600 closing at its lowest since January 2024. The pan-European STOXX 600 .STOXX dropped 4.5%, down for the fourth straight session.

Treasury yields rose on optimism that some countries may negotiate deals with Trump to avoid tariffs.

Trump's advisers said he would be willing to negotiate with countries that are scrambling to head off tariffs as high as 50% due to take effect on Wednesday. White House economic adviser Stephen Miran encouraged countries hoping to escape high reciprocal U.S. tariff rates to make offers to Trump.

But Trump ruled out discussions with Beijing as he ratcheted up a confrontation with China.

The European Union is still willing to negotiate with the U.S. administration, European Commission President Ursula von der Leyen affirmed on Monday, adding that Brussels was also ready to take counter measures.

Benchmark 10-year note yields US10YT=RR were last up 15.8 basis points on the day at 4.149% and are on track for the largest daily increase since April 10, 2024. They fell to 3.86% on Friday, the lowest since October 4.

Interest-rate sensitive two-year yields US2YT=RR rose 6.2 basis points to 3.732% and are heading for their largest daily increase since March 24. They earlier reached 3.435%, the lowest since September 2022.

The dollar weakened against the safe-haven Swiss franc, while a gloomier growth outlook kept oil prices down.

The dollar hit its lowest in six months against the Swiss franc CHF=. It was last down 0.1% at 0.86.

Oil prices slid to a near four-year low. Brent futures LCOc1 fell $1.37, or 2.1%, to settle at $64.21 per barrel, while U.S. West Texas Intermediate crude futures CLc1 fell $1.29, or 2.1%, to settle at $60.70.

Gold prices fell as well. Spot gold XAU= was down 2.4% to $2,963.19 an ounce.

JPMorgan Chase JPM.N CEO Jamie Dimon warned the tariffs could cause lasting damage, while fund manager Bill Ackman said they could lead to an "economic nuclear winter."

"Last week's theme is continuing but there were some meaningful developments over the weekend, in particular with Wall Street titans and business leaders effectively coming out very strongly against President Trump's policies and tariffs," said Oliver Pursche, senior vice president, advisor for Wealthspire Advisors in Westport, Connecticut.

"That pressure is going to continue to mount."

(Additional reporting by Alun John in London and Saeed Azhar in New York; Editing by Kim Coghill, Himani Sarkar, Shri Navaratnam, Hugh Lawson, Nick Zieminski and Richard Chang)

((caroline.valetkevitch@thomsonreuters.com))

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