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By Shashwat Chauhan and Kanchana Chakravarty

May 23 (Reuters) - Wall Street's main indexes fell on Friday after U.S. President Donald Trump recommended 50% tariffs on the European Union, while Apple slid after he warned the company would have to pay tariffs if iPhones were not made in the United States.

"The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump said in a post on Truth Social.

Apple AAPL.O touched a two-week low and was down 2.7% after Trump said in a separate post before this that the iPhone-maker would be subject to 25% tariffs if its phones sold in the U.S. were not made within the country's borders.

"Opening more fronts on the trade war was exactly what traders, hoping for a quiet end to a pre-holiday weekend, did not need and it clearly caught most off guard," said Steve Sosnick, chief market analyst at Interactive Brokers.

"It's not clear what prompted these statements, but they are emblematic of the type of volatility that we should always be prepared for."

At 09:48 a.m. ET, the Dow Jones Industrial Average .DJI fell 394.94 points, or 0.94%, to 41,464.15, the S&P 500 .SPX lost 68.92 points, or 1.18%, to 5,773.09, and the Nasdaq Composite .IXIC lost 288.78 points, or 1.53%, to 18,636.96.

Wall Street's "fear gauge", the CBOE Volatility Index .VIX, spiked to a more than two-week high and was last at 24 points.

All 11 major S&P sub-sectors fell, with consumer discretionary .SPLRCD and information technology .SPLRCT being the worst hit.

Most megacap and growth stocks dropped, with Amazon AMZN.O and Nvidia NVDA.O sliding about 2% each.

A gauge for semiconductor stocks .SOX fell nearly 2%, while carriers including American Airlines AAL.O lost more than 1%.

Sportswear giant Nike NKE.N dropped 2.5% and electronics retailer Best Buy BBY.N dipped 1.7%.

Deckers Outdoor DECK.N slumped more than 21% after the maker of UGG boots forecast first-quarter net sales below estimates and said that due to tariff-led macroeconomic uncertainty, it would not be providing annual targets.

All three main stock indexes were set for sharp weekly losses as worries about mounting debt pushed Treasury yields higher earlier in the week. Moody's downgrade of the U.S. credit rating late last week had initially sparked the concerns.

The Republican-controlled U.S. House of Representatives passed the sweeping tax and spending bill that would enact much of Trump's policy agenda by a narrow margin on Thursday. The bill now heads to the Senate, which the GOP controls by 53-47, for approval.

Long-dated government bond yields eased further as investors moved to safer assets, with those on the 10-year note US10YT=RR off 4.8 basis points to 4.505%.

On the flip side, Intuit INTU.O advanced 8.7% to an all-time high after the tax-preparation software provider forecast fourth-quarter revenue and profit above estimates.

Trading activity is expected to thin out heading into a long weekend as markets will be shut on Monday for Memorial Day.

(Reporting by Shashwat Chauhan and Kanchana Chakravarty in Bengaluru; Additional reporting by Twesha Dikshit; Editing by Pooja Desai)

((Shashwat.Chauhan@thomsonreuters.com))