By Jon Sindreu 

Global stocks fell Monday, with the Dow Jones Industrial Average losing more than 400 points, as investors continued to parse the impact of ongoing tensions over trade between the U.S. and China.

The Dow fell 419 points, or 1.7%, to 24161 in recent trade. The S&P 500 dropped 1.8%, and the Nasdaq Composite fell 2.6%.

Investors around the globe have been spooked by the prospect of a full-blown trade war between the U.S. and China. While the tariffs so far announced by the U.S. administration -- and China's retaliatory measures -- amount only to a small number of goods, analysts fear that tensions could escalate and spread across other major economies.

President Donald Trump now also plans to bar many Chinese companies from investing in U.S. technology firms.

Joseph Amato, chief investment officer at Neuberger Berman, said that trade has been the main focus for investors, but most portfolio managers at his firm don't see it becoming a big disruption to the world economy.

The market also isn't concerned about tariffs that affect a small portion of goods, he said, noting there are "many other ways that the Chinese could impact the U.S. economy."

"That's what the market's worried about," he said.

Stock losses to start off the week were broad, sending the Stoxx Europe 600 down 2% and Hong Kong's Hang Seng down 1.1%.

Trevor Greetham, multiasset head at Royal London Asset Management -- a firm with around GBP114 billion ($151.2 billion) under management -- has reduced his fund's bias toward stocks to its lowest in six years, but remains positive on U.S. shares.

"It's more likely the trade issue impacts emerging markets than it does the U.S., because the U.S. is a relatively closed economy," he said.

In Europe and emerging markets such as China, recent economic data has pointed to weaker growth than earlier in 2018, further damping investor sentiment. On Monday, the monthly Ifo Business Climate Index suggested German business sentiment deteriorated further in June.

"We've moved away from the synchronous global expansion," said Bob Baur, chief global economist at Principal Global Investors, who believes global growth peaked around February of this year, but that "the U.S. is still gaining momentum."

Some central banks are already moving to act as a cushion, investors said.

On Sunday, the People's Bank of China said it would cut the amount of reserves banks are required to keep with the central bank, a move that can help lower borrowing costs -- even though it is often associated with the need to free up liquidity to prop up the currency.

The European Central Bank said two weeks ago that, even as bond purchases are set to stop in December, interest rates in the eurozone will remain unchanged at least until summer of next year.

"We are getting to see signs of central banks outside the U.S. turning a bit easier, and that should help stock markets perk up later in the year, " said Mr. Greetham, who has been buying back some bonds to account for easier central-bank policy.

After strong gains in the yuan against the dollar earlier this year, the U.S. currency has now made up all the lost ground.

The WSJ Dollar Index, which tracks the dollar against a basket of currencies, fell less than 0.1% Monday, and 10-year Treasury yields edged down to 2.875% after closing at 2.902% last week. Yields fall as bond prices rise.

In commodities markets, oil prices extended gains after major oil producers had agreed Friday to only modest increases in production. U.S. crude fell 0.4% to $68.31 a barrel Monday.

--Allison Prang contributed to this article.

Write to Jon Sindreu at jon.sindreu@wsj.com

(END) Dow Jones Newswires

June 25, 2018 12:41 ET (16:41 GMT)

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