ANALYSIS-Trump's Europe tariff threat over Greenland revives talk of 'Sell America' trade

By Yoruk Bahceli and Dhara Ranasinghe

LONDON, Jan 19 (Reuters) - U.S. President Donald Trump's renewed tariff threats against European allies amid rising hostility implicit Greenland person revived speech of the 'Sell America' commercialized that emerged successful the aftermath of his sweeping Liberation Day levies past April.

Stock markets bore the brunt connected Monday of fears that the commercialized warfare could re-escalate, ​with European equities dropping implicit 1% and U.S. banal futures taking a akin deed that points to weakness pursuing Monday's nationalist holiday.

The dollar was connected the backmost ft too, a ‌sign that the world's No.1 reserve currency was besides successful the crosshairs of Trump's menace connected Saturday to summation tariffs connected goods from respective European countries until the United States is allowed to bargain Greenland. They volition commencement with a 10% tariff from ‌February 1, rising to 25% connected June 1.

The euro bounced from its lowest since precocious November, on with sterling and Scandinavian currencies. The Swiss franc, a classical harmless haven, headed for its largest regular emergence against the dollar successful a month.

"I'm definite that determination are a batch of radical that are reasonably aghast astatine what happened implicit the play and astir apt reasoning astir however they clasp their assets," said Francesca Fornasari, caput of currency solutions astatine Insight Investment.

She said the dollar could determination little but was besides supported by a beardown U.S. system and U.S. shares.

And truthful far, marketplace moves are modest, particularly compared to past April's adjacent 2% regular ⁠dollar descent pursuing Liberation Day. It's a sign, immoderate analysts said, that ‌markets deliberation Trump volition extremity up de-escalating, arsenic helium has done previously.

A pending U.S. Supreme Court ruling connected the legality of Trump's tariffs and uncertainty connected however European capitals volition respond besides blur the picture.

The EU whitethorn respond with tariffs against the U.S., but could besides instrumentality the truthful acold untested "anti-coercion instrument", which could ‍limit U.S. entree to nationalist tenders, investments oregon banking enactment ‍or restrict commercialized successful services.

"For the astir portion truthful acold it would look to beryllium much sound than awesome astatine this point," said Leonard Kwan, fixed income portfolio manager astatine T Rowe Price.

WILL EUROPEAN INVESTORS DUMP U.S. ASSETS?

While heavy and liquid U.S. superior markets - the Treasury marketplace unsocial is worthy $30 trillion - marque diversification for planetary investors hard, the U.S. is besides susceptible to overseas outflows, analysts said.

European countries are the ​United States' biggest creditor, owning $8 trillion worthy of equities and bonds, astir doubly arsenic overmuch arsenic the remainder of the satellite combined, said Deutsche Bank.