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Auto stocks fall on latest Trump tariff shot

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Dollar up against Canadian dollar, Mexican peso

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Gold hits record high

(Updates to afternoon U.S. trading)

By Chuck Mikolajczak

NEW YORK, March 27 (Reuters) - Global stocks dipped and gold hit a record high on Thursday in the wake of the latest tariffs from U.S. President Donald Trump's administration that expanded the trade war to auto imports.

Trump late on Wednesday announced 25% tariffs on all vehicles and foreign-made auto parts imported into the United States, scheduled to take effect on April 3. This weighed on Japan's Nikkei and South Korea's KOSPI.

Countries around the globe threatened retaliatory levies.

U.S. stocks oscillated between gains and losses while automakers slumped, although electric vehicle makers Tesla and Rivian rallied as all of their production is located within the U.S..

General Motors ( GM ) tumbled more than 6%, while Ford lost about 3%, reflecting concerns about the impact on their supply chains. U.S.-listed shares of Stellantis ( STLA ) dipped roughly 1%.

"The pendulum that seems to be swinging right now for markets is initially having a knee-jerk reaction to the worst possible kind of expression of whatever's announced, and then slowly digesting the fact that it might not be as bad as feared and it might not even be as announced because it's part of a broader negotiation," said Eric Theoret, FX strategist at Scotiabank in Toronto.

The Dow Jones Industrial Average fell 120.77 points, or 0.28%, to 42,333.38, the S&P 500 fell 9.03 points, or 0.17%, to 5,702.48 and the Nasdaq Composite fell 41.37 points, or 0.23%, to 17,857.20.

European stocks closed lower, with weakness in shares of the continent's top carmakers. Volkswagen was down 1.26%, BMW off 2.55% and Mercedes-Benz was 2.69% lower.

MSCI's gauge of stocks across the globe fell 1.77 points, or 0.21%, to 844.15.

The pan-European STOXX 600 index fell 0.44% to 546.31, a two-week closing low.

Tariffs and their effect on the global economy, as well as their potential to delay Federal Reserve rate cuts, have weighed on stocks in recent weeks, though they have shown signs of stabilizing lately.

Reflecting investors' caution, spot gold was 1.19% higher at $3,055.33 an ounce, after hitting a record $3,059.30.

Goldman Sachs raised its gold price forecast on Wednesday to $3,300, citing stronger-than-expected exchange-traded fund inflows and sustained central bank demand.

The dollar index, which measures the greenback against a basket of currencies, dipped 0.35% to 104.27, with the euro up 0.42% at $1.0797.

Versus the dollar, the Mexican peso weakened 0.98% to 20.324 while the Canadian dollar softened 0.29% to C$1.43 as both countries are expected to be heavily impacted by the auto tariffs.

Trump has announced plans to impose reciprocal tariffs on all countries on April 2.

U.S. data showed the labor market remains on solid footing, although the impact of Trump's tariff policy and the aggressive cutting of federal workers by billionaire Elon Musk's Department of Government Efficiency has yet to show an outsized impact.

Other data showed the economy grew at a slightly more solid pace in the fourth quarter than previously estimated.

The benchmark U.S. 10-year Treasury note yield rose 2.5 basis points to 4.363%. While the yield on the seven-year note was higher after a soft auction of $44 billion of the paper.

U.S. crude settled 0.39% higher at $69.92 a barrel and Brent settled at $74.03 per barrel, up 0.33% on the day, as investors assessed the ramifications of the latest escalation in the trade war.

(Reporting by Chuck Mikolajczak; Additional reporting by Karen Brettell in New York, Pranav Kashyap and Johann M Cherian in Bangalore; Editing by Richard Chang, Kirsten Donovan)