Global stocks dropped and the dollar eased against the safe-haven yen and Swiss franc on Monday after U.S. President Donald Trump threatened to slap extra tariffs on goods imported from European nations that oppose his planned takeover of Greenland.

U.S. cash equity markets will be closed on Monday for Martin Luther King Jr. Day, although S&P 500 and Nasdaq futures have both dropped over 1%.

Gold and silver prices jumped to new record peaks, while oil dipped on concerns about what a possible trade war between the U.S. and Europe could mean for global growth and demand.

In Europe, the STOXX 600 index fell 1.3%. Blue-chip indexes in Frankfurt, Paris and London were down 0.5% to 1.5%.

Japan's Nikkei fell 0.7%, and MSCI's broadest index of Asia-Pacific shares outside Japan was little changed.

Trump said he would impose additional 10% levies from February 1 on goods imported from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, rising to 25% on June 1 if no deal on Greenland was reached.

Major European Union states condemned the tariff threats as blackmail, and France proposed responding with a range of previously untested economic countermeasures. The EU and Britain had agreed trade deals with the U.S. last year.

"There is obviously a response (in financial markets) to the new tariff threats," said George Lagarias, chief economist at Forvis Mazars.

"It's highly likely that the White House will use the threat of tariffs consistently, even when deals have previously been agreed."

The EU's retaliation options include a package of its own tariffs on 93 billion euros ($108 billion) of goods imported from the U.S. that was suspended for six months in early August, and measures under an Anti-Coercion Instrument that could hit U.S. services trade or investments.

The tariff threats should also make for a fraught few days at Davos as leaders from around the world gather in Switzerland at the World Economic Forum, including a large U.S. group led by Trump.

DOLLAR NOT SO SAFE HAVEN

In currency markets, the euro recovered from a seven-week low, rising 0.3% to $1.1631.

"The move in EUR/USD has been relatively contained, as investors remain mindful that further escalation could ultimately weigh on the USD as well - with the "Sell America" narrative still lurking in the background," said Kristoffer Kjær Lomholt, co-head of fixed income and foreign exchange research at Danske Bank.

"With a relatively quiet data calendar this week, price action in the cross is likely to be driven primarily by developments on the tariff front."

Sterling clawed its way back up to $1.3408 GBP=, while safe-haven currencies benefited. The dollar eased 0.4% against the Swiss franc to 0.7982 francs CHF=EBS, and 0.1% against the yen to 157.94 JPY=EBS.

Investors largely shrugged at an announcement from Japanese Prime Minister Sanae Takaichi to dissolve parliament on Friday ahead of a snap general election to be held on February 8, as she looks to shore up her coalition's fragile majority.

"The Bank of Japan's response will be critical, given PM Takaichi’s expressed preference for cooperation and softened central bank independence," said Scotiabank chief FX strategist Shaun Osborne.

The BoJ meets on Friday, where it is widely expected to maintain its policy rate at 0.75% after a rate hike in December.

The dollar index, which measures the currency against six peers, was down slightly on Monday.

The cash U.S. Treasury market was shut, but 30-year bond futures USc1 fell 16 ticks.

CHINA GROWTH SLOWS

Away from the tariff threats, Chinese blue chips .CSI300 were little changed after data showed annual economic growth slowed to 4.5% in the December quarter, though that still topped forecasts.

Industrial output also beat the market thanks to strength in exports, but disappointing retail sales underlined the continued weakness of domestic demand.

Gold again proved to be a safe harbour, as high as $4,689 an ounce XAU=, while silver XAG= climbed to $94.08, both hitting new record highs. GOL/

Oil prices were down slightly on concerns that demand could suffer should the trade war escalate. O/R

Brent LCOc1 fell 0.8% to $63.64 a barrel, while U.S. crude CLc1 dipped 0.7% to $59.03.

($1 = 0.8611 euros)