GLOBAL MARKETS-European stocks fall, dollar drops, markets focus on Trump's tariff threats

(Updates throughout after European market open)

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Trump steps up push to take control of Greenland

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Market reaction less severe than after "Liberation Day" tariffs, Amundi says

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US Treasury yields spike, spreads steepen

By Elizabeth Howcroft

PARIS, Jan 20 (Reuters) - European stocks fell in early trading on Tuesday, the dollar entered a second day of declines and U.S. Treasury yields hit a four-month high after U.S. President Donald Trump continued his push to take ?control of Greenland and threatened to reignite a trade war with Europe.

Trump said he no longer thought "purely of Peace" after he did not win the Nobel Peace ?Prize, and reiterated a threat to increase tariffs on EU members Denmark, Finland, France, Germany, Sweden, and the Netherlands, ?along with Britain and Norway, until the U.S. is allowed to buy Greenland. EU leaders ?will discuss options, including tariffs ?worth 93 billion euros ($109 billion) on U.S. imports, at an emergency summit on Brussels on Thursday. Stock markets fell, extending Monday's declines, as the threats from the U.S. ?reignited a debate over the "Sell America" trade that emerged after ?Trump's "Liberation Day" levies announced last April. Europe's STOXX 600 was down 1.4% on the day at 0956 GMT, having fallen 1.2% on Monday, while the MSCI World Equity Index was down 0.2%. The FTSE ?100 was down 1.4% .

TARIFFS ON FRENCH WINES AND CHAMPAGNE Trump ?separately threatened to ?hit French wines and champagne with 200% tariffs, in an apparent effort to cajole French President Emmanuel Macron to join his Board of Peace initiative.

Amelie Derambure, senior multi-asset portfolio manager at Amundi in Paris, said ?that the downward move in markets was "precautionary profit-taking and some risk reduction" but that markets were helped by the macroeconomic backdrop. Recent economic data has pointed to growth and decelerating inflation, and her portfolios remain risk-orientated, she said.

"The situation in Greenland (is) worrying the markets. For the moment it remains relatively contained, there is no panic," she said.

"I don't see for the moment anything comparable to Liberation Day or to something very dramatic for markets," she added.

The dollar index was down ?0.6% on ?the day, in its second day of declines, at 98.485, and the euro was up 0.7% against the dollar at $$1.1726, its highest since January 6.

US GOVERNMENT BOND YIELDS SPIKE As investors weighed up the risk ?of Trump reigniting a trade war with Europe over Greenland, U.S. Treasury yields hit their highest since September in early trading.

U.S. markets were closed on Monday for a public holiday, so the moves were a delayed reaction to the developments that began over the weekend. The spread between the U.S. 30-year yield and the 10-year yield, as well as the spread between the two-year and 10-year yield, were both set for their biggest one-day steepening since August 2025. Elsewhere, Japanese government bond yields hit record highs over concerns that tax cuts ?will make the government's finances worse. Japanese Prime Minister Sanae Takaichi had called a snap general election on Monday.

Oil prices edged higher, with Brent crude futures up 0.2% at $64.01 a barrel and U.S. West Texas Intermediate up 0.5% at $59.72 a barrel, as prices were supported by expectations for global economic ?growth.

Gold hit a record high, rising above $4,700 an ounce.

($1 = 0.8535 euros) (Reporting by Elizabeth Howcroft in Paris; editing by Barbara Lewis)