NEW YORK, April 4 (Reuters) - Volatility measures across global financial markets jumped on Friday and Wall Street's top "fear gauge" soared to an eight-month high as China imposed fresh tariffs on all U.S. goods in response to President Donald Trump's sweeping levies.
The Cboe Volatility Index (.VIX), opens new tab, an options-based gauge of stock investors' anxiety about the market's near-term outlook, rose as much as 15.54 points to a 45.56, its highest since August.
The index was last up 10.70 points to 40.72.
"A VIX at 40 is a sign of fear for sure," said Joe Tigay, portfolio manager for Rational Equity Armor Fund.
"Usually you see a 40 when there's something more than the usual sell-off ... some sort of credit risk, margin risk, something that could cause a contagion that could spill over and across to other asset classes," Tigay said.
The jump in anxiety was broad with no market spared.
In currency markets, euro one-month implied volatility shot up to a one-year high of 9.73 as the common currency fell 0.6% against the dollar. The greenback has been smacked around by rapidly flowing news on Trump's tariffs and countermeasures from other countries.
"FX pricing has swung wildly and the dollar's movement has been the opposite of smooth," said Helen Given, director of trading at Monex USA in Washington.
"Overnight, for example, we saw big jumps for the dollar across the board that were almost completely gone as the U.S. day started, but that movement has come back with a vengeance," Given said.
Meanwhile, U.S. Treasury yields went lower, a solid U.S. jobs report soothed some nerves.
The yield on the benchmark U.S. 10-year Treasury note fell to a six-month low of 3.86%, slipping below the widely watched 4% mark.
Safe-haven buying of Treasuries has sent yields, which move inversely to prices, down sharply in recent weeks, driven by concerns about recession and shifting expectations about potential Federal Reserve policy.
Investors do not expect volatility to subside quickly.
"Until there's actually a change in the policy or evidence of real negotiations going on, the market's going to be under pressure," Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York.
Still, equities remained at the center of the market turmoil, with the tech-heavy Nasdaq looking set to confirm a bear market on Friday, down more than 20% from its record high.
"I'm just grateful I'm not on the equity side," Monex's Given said.
Investors, who have been battered by a sharp selloff this year - the S&P 500 is down about 11% for the year - have been keeping an eye on the volatility gauge as an indicator of market stress.
In the last 10 instances when the S&P 500 experienced a correction - a fall of 10% or more from a recent high - the VIX on average touched a peak level of 37 before the selling was done.
Reporting by Saqib Iqbal Ahmed; additional reporting by Chuck Mikolajczak; Editing by Megan Davies, Chizu Nomiyama and David Gregorio
