(Updates with closing US market levels)

*

Nasdaq confirms bear market

*

Dow confirms correction

*

China strikes back after Trump tariffs

*

Live coverage of the latest developments on tariffs

By Caroline Valetkevitch

NEW YORK, April 4 (Reuters) - Global stock markets extended their recent rout on Friday, with S&P 500 companies wiping out $5 trillion in stock market value since U.S. President Donald Trump unveiled sweeping tariffs on Wednesday, while investors fled to the safety of government bonds.

The Nasdaq confirmed it was in a bear market, ending more than 20% below its record high close, while oil prices and other commodities plunged.

That $5-trillion loss marked a record two-day decline for the S&P 500 benchmark, exceeding a two-day loss of $3.3 trillion in March 2020 when the pandemic ripped across global markets, according to LSEG data compiled by Reuters.

Responding to Trump's tariffs, China on Friday said it would impose additional levies of 34% on American goods, confirming investor fears that a full-blown global trade war is under way and that the global economy may be at risk of a recession.

Trump slapped a 10% tariff on most U.S. imports and much higher levies on dozens of countries, erecting the steepest trade barriers in more than 100 years.

"It's sort of the worst fears of where the tariff program was headed," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"For those investors who were sure it was just a negotiation - while that still may be true at some point - it's getting awfully deeper into the detail and more dangerous for companies."

The tech-heavy Nasdaq has fallen 22.7% from its December 16 record close as investors fled riskier assets on the tariff worries.

Meanwhile, the Dow Jones Industrial Average and pan-European STOXX 600 index each confirmed they were in a correction.

All three of the major U.S. stock indexes suffered their biggest weekly percentage losses since March 2020, and the Cboe Volatility Index jumped to 45.31, its highest closing level since April 2020.

Companies with exposure to China fell across the board, with Apple ( AAPL ) dropping 7.3%. The chipmakers index sank 7.6%. Bank and energy shares dropped amid the recession fears.

The Dow Jones Industrial Average fell 2,231.07 points, or 5.50%, to 38,314.86. The index confirmed a correction, finishing more than 10% below its record closing high from December 4.

The S&P 500 fell 322.44 points, or 5.97%, to 5,074.08 and the Nasdaq Composite fell 962.82 points, or 5.82%, to 15,587.79.

The pan-European STOXX index closed 5.1% lower, its biggest daily loss since the COVID-19-fuelled selloff in 2020. The index fell nearly 12% from its March 3 all-time closing high, confirming it was in correction territory.

MSCI's gauge of stocks across the globe fell 43.35 points, or 5.37%, to 764.29, and was set for its biggest weekly percentage drop since 2020.

Oil prices plunged about 7% to settle at their lowest in over three years, after the tariff response from China, the world's top oil importer.

Brent crude futures fell 6.5% to settle at $65.58. U.S. crude futures lost 7.4% to settle at $61.99.

Data showing the U.S. economy added far more jobs than expected in March did little to brighten the mood.

Federal Reserve Chair Jerome Powell said in remarks at a business journalists' conference in Arlington, Virginia, that Trump's new tariffs are "larger than expected" and the economic fallout, including higher inflation and slower growth, likely will be as well.

He also said the U.S. central bank does not have a prediction of a downturn in its outlook but he recognized private-sector forecasters are shifting on that front.

Earlier, investment bank JP Morgan said it was forecasting a 60% chance of the global economy entering a recession by year-end, up from 40% previously.

"I think (Powell's) comments will be disappointing for those who believe that the Fed is going to step in anytime soon," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

The U.S. dollar recovered against the euro and yen, with Powell signalling a cautious tone on future easing. The dollar index was last up 0.7% on Friday after its biggest fall since November 2022 on Thursday.

The euro was last down 0.69% at $1.10976, after jumping 1.8% - its biggest daily rise since November 2022 - on Thursday. Against the Japanese yen, the dollar strengthened 0.58% to 146.9.

After years of huge flows into U.S. stocks and a booming American economy, investors are grappling with where to put their cash.

That helped drive a powerful rush towards government bond markets. The yield on the benchmark U.S. 10-year Treasury note fell 12.2 basis points to 3.933% after falling to a six-month low of 3.86%. Yields move inversely to prices.

The German 10-year bond yield, the benchmark for the euro zone bloc, fell as much as 17 bps during the day.

Money market futures were pricing in cumulative rate cuts of 110 basis points from the Fed by the end of this year, compared with about 75 bps a week earlier.

Traders increased their bets on Bank of England and European Central Bank reductions too.

"A lot of investors I've talked to have just said in this kind of environment, let's go to cash and just wait it out," Meckler said.

(Reporting by Caroline Valetkevitch in New York; additional reporting by Harry Robertson in London, Noel Randewich in San Francisco and Stephen Culp in New York, and Rae Wee in Singapore; Editing by Sharon Singleton, Hugh Lawson, Peter Graff, Alison Williams, Chizu Nomiyama and Rod Nickel)