GLOBAL MARKETS-Stocks and oil fall, yen rallies as Trump threatens counter to China tariffs

* USD index weakens after Powell speech, Trump tweets

* Trump expected to announce action on China later in the day

* Crude on track for weekly decline (Updates prices, adds Powell speech, Trump tweets, changes dateline from previous LONDON)

By Rodrigo Campos

NEW YORK, Aug 23 (Reuters) - A global stock index fell alongside oil prices and U.S. yields after U.S. President Donald Trump threatened to further escalate his trade war with China "this afternoon" after a new round of retaliation tariffs from Beijing.

Earlier on Friday China's commerce ministry said in a statement it would impose tariffs on about $75 billion in imports from the United States including some agricultural products, crude oil and small aircraft.

Trump responded mid-morning in a series of tweets, writing that "American companies are hereby ordered to immediately start looking for an alternative to China."

Trump cannot compel U.S. companies to abandon China and he gave no detail on how he might proceed with any such order.

"Clearly when you look at U.S. yields' and the dollar's reaction, there are concerns that these latest comments from Trump on China will push the U.S. into recession," said Marvin Loh, senior global markets strategist at State Street.

Stocks that benefit during economic expansions fell the most, also hinting at recession concerns.

"There is a lot of worry here. I would say what (Trump) is tweeting is disconcerting. It's a fair reaction from the markets. I don't think anyone thought we'd get to this level," said Michael O'Rourke, chief market strategist at JonesTrading.

The Dow Jones Industrial Average fell 422.28 points, or 1.61%, to 25,829.96, the S&P 500 lost 49.35 points, or 1.69%, to 2,873.6 and the Nasdaq Composite dropped 156.13 points, or 1.95%, to 7,835.25.

The pan-European STOXX 600 index turned sharply lower after Trump's tweets and last fell 0.68%, while MSCI's gauge of stocks across the globe dropped 0.92%.

Emerging market stocks lost 0.23%.

OIL, YIELDS FALL

Oil prices fell after China's retaliatory tariffs announcement highlighted concern the trade dispute between the world's two largest economies could slow global growth or even trigger a recession.

Trump's tweets made matters worse.

"We still view the U.S.-Chinese trade standoff as a major bearish consideration that will likely be requiring additional downward oil demand adjustments as this year proceeds," said Jim Ritterbusch, president of Ritterbusch and Associates.

U.S. crude fell 3.07% to $53.65 per barrel and Brent was last at $58.67, down 2.09% on the day.

U.S. Treasury yields inched lower, with 10-year notes last up 22/32 in price to yield 1.5351%, from 1.61% late on Thursday.

The 2-year/10-year yield curve tripped to negative territory earlier in the session and for a third consecutive day.

The U.S. dollar fell after Federal Reserve Chair Jerome Powell said the Fed will "act as appropriate" to keep the current economic expansion on track, and dropped further after Trump's comments.

The dollar index fell 0.44%, with the euro up 0.56% to $1.114.

The Japanese yen strengthened 0.84% versus the greenback at 105.56 per dollar, while Sterling was last trading at $1.2268, up 0.15% on the day.

Spot gold added 1.8% to $1,526.05 an ounce.

(Reporting by Rodrigo Campos; additional reporting by Karen Brettell, Saqib Iqbal Ahmed, Stephanie Kelly and Gertrude Chavez-Dreyfuss; editing by Chris Reese)

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