Euro surges on Ukraine ceasefire proposal, tariffs squeeze stocks

By Tom Westbrook

SINGAPORE, March 12 (Reuters) - The euro was riding at five-month highs on Wednesday on Ukraine's readiness to accept a month-long ceasefire, while stocks whipsawed on back-and-forth US tariff plans and concern about a US economic slowdown.

European equity futures jumped 0.8% and FTSE futures rose 0.3% after the US said it would restore military aid and intelligence sharing to Ukraine after Kyiv said it would accept a US ceasefire proposal.

Russia is yet to respond.

The euro hit its highest since October in New York trade at $1.0947 and was steady at $1.0913 in the Asia session. Russia's rose to a seven-month high overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2% with markets in Hong Kong and China broadly steady and Japan's Nikkei holding its ground after slumping to a near six-month low a day earlier.

On Wall Street overnight the S&P 500 flirted with notching a 10% fall from February's record closing high, and finished a volatile session about 0.8% lower.

President Donald Trump threatened then backed down from a doubling of steel and aluminium tariffs on Canada to 50%, after Ontario suspended plans for a surcharge on exported electricity.

The dollar has sunk, Treasuries have rallied and lately stocks have suffered their heaviest selling in months as traders worry tariffs and policy uncertainty will hurt US growth.

"He's clearly trying to rebalance the economy back in favour of America," said Catriona Burns, lead portfolio manager of a global fund at Wilson Asset Management in Australia.

"In this interim bit at the start, where he's going hard, it's a very dynamic environment to be operating in," she said.

"The uncertainty that the tariffs and the back-and-forth on them is creating is hindering decision making ... so the effect that has in terms of a short-term pocket for the U.S. and an impact on growth there will be really interesting."

Travel stocks took a beating after Delta Air Lines cut its profit forecast in half and rivals United and American Airlines warned of deteriorating results, falling government bookings and uncertainty weighing on demand.

Investors nervous about the economy also punished downbeat financial results from retailers, with Dick's Sporting Goods stock diving 5.7% on a dour outlook and Kohl's Corp shares plummeting 24% after reporting a drop in sales.

Steel and aluminium tariffs take effect later in the day.

US inflation data for February is also due, though it is likely to be too early to show much of a tariff hit.

A central bank meeting in Canada will be closely watched to see what monetary policymakers on the front line of Trump's trade war are thinking. A seventh consecutive rate cut -- seen as only an even chance two weeks ago -- is priced in to the market.

The Canadian dollar hit a one-week low overnight before recovering to C$1.443 per dollar. U.S. equity futures were broadly steady.

The yen inched down from a five-month high to trade around 148 per dollar. The risk-sensitive Australian dollar was pinned just below 63 US cents and Brent crude futures were held just under $70 a barrel.

(Editing by Shri Navaratnam)