Stocks lose ground amid inflation concerns, trade war worries

NEW YORK/LONDON (Reuters) -Safe-haven gold hit a fresh record high on Friday as an index of global shares fell, weighed down by worries over a looming trade war sparked by tariff decisions from U.S. President Donald Trump.

U.S. traders had new sticky inflation data to grumble about [.N] but it was Trump's 25% tariff on auto imports and plans for much broader levies next week that continued to cause the nail-biting.

On Wall Street, all three main indexes ended lower and notched their third straight losses. The biggest losers were communication services, consumer discretionary, technology and financial equities. Utilities stocks finished higher.

The Dow Jones Industrial Average fell 1.69% to 41,583.90, the S&P 500 fell 1.97% to 5,580.94 and the Nasdaq Composite fell 2.7% to 17,322.99.

Europe's STOXX 600 index finished down 0.77% and ended the week down 1.38%, dragged down by a nearly 1% drop by the car and auto parts sector. [.EU]

MSCI's gauge of stocks across the globe fell 1.58% to 829.89. It is on track to end the week down 1.44%.

State Street's head of global macro strategy, Michael Metcalfe, said U.S. car tariffs had been more aggressive than expected, especially as there had been no adjustments made for U.S. neighbors Mexico and Canada.

"What I don't know is whether the hawkishness of the auto tariffs is going to translate to the broader tariffs that we are going to get next week," Metcalfe said. "And that is keeping risk appetite on the back foot."

Gold prices set another new peak of $3,086.70 as the threat of trade wars drives a rush towards the safe-haven metal.

It was last up 0.86% to $3,082.25 an ounce. [GOL/] For the quarter it is now up more than 17%, which is its best quarterly performance since 1986, and its 18th record high this year. U.S. gold futures settled 0.8% higher at $3,114.30.

Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey, said gold prices have been buoyed by rising inflation, elevated geopolitical tensions, and fiscal risks, particularly deficit spending in the U.S. and other countries.

"We continue to see inflation as being stubborn, sticky and just won't go away. The geopolitical environment continues to be risky and elevated ... You can see the fiscal risk on the U.S. budget side but also broader Western sovereign debt and it's getting challenging with the budget continuing to run a deficit and interest rates remaining stubbornly high," Latif said.

In the bond market, U.S. Treasury yields declined as investors assessed the likely negative hit on growth from Trump's tariffs. Traders in interest rate futures were betting on a total of about 66 basis points in interest rate cuts this year, according to LSEG data.

The yield on benchmark U.S. 10-year notes fell 12 basis points to 4.249%.

Traders now see an 80% chance of a 25-basis-point ECB rate cut in April from around a 50% chance a week ago. German Bund yields, the euro zone's benchmark of borrowing costs, fell 0.2 basis points to 2.731%. [GVD/EUR]

The dollar weakened against major currencies, including the Japanese yen and euro, after the hotter-than-expected U.S. inflation data added to concerns about tariffs.

The euro has been one of the big beneficiaries of the greenback's struggles. It is up 0.21% this week against the greenback.

The dollar weakened 0.87% to 149.73 against the Japanese yen, while the euro rose 0.29% at $1.0832. Against the Swiss franc, the dollar weakened 0.06% to 0.881. The Canadian dollar weakened 0.07% versus the greenback to C$1.43 per dollar.

In commodities, oil prices turned flat as traders assessed a tightening of crude supplies along with new U.S. tariffs and their expected effect on the world's economy. [O/R]

Brent crude futures fell 0.5% to settle at $73.63 a barrel. U.S. West Texas Intermediate crude futures fell 0.8% to close at $69.36 a barrel.

(Reporting by Marc Jones and Chibuike Oguh in New York, Editing by William Maclean, Sandra Maler and Rod Nickel)