New York (AFP) - Investors dumped US government bonds, the dollar tumbled and stocks seesawed Friday, capping a volatile week as President Donald Trump’s unpredictable tariff policy rattled market confidence.

Trump triggered a massive market sell-off last week by announcing universal tariffs, and this week he sparked a huge but short-lived rally by pausing higher duties against scores of countries.

But he kept China in his crosshairs, hitting Chinese goods with a 145 percent tariff.

Beijing said Friday that it would strike back with 125 percent duties on American products, but suggested it would not retaliate further in the future.

Wall Street indexes opened in the red Friday but rose shortly thereafter, ultimately finishing the session solidly higher.

Traders hope “that we’re going to pivot from the phase of escalation to negotiation and hopefully further down the road to de-escalation,” said Angelo Kourkafas of Edward Jones.

Potentially “a lot of bad news is in the price already,” he added.

European markets also had a roller-coaster trading day, with Frankfurt closing 0.9 percent lower and Paris down 0.3 percent. London rose 0.6 as data showed the UK economy grew far more than expected in February.

“The main driver of the renewed market pressure was an increased focus on the US-China escalation,” said Jim Reid, managing director at Deutsche Bank.

“Neither the US nor China are showing signs of backing down, with President Trump expressing confidence in his tariff plans,” Reid said.

The dollar plunged to its lowest level against the euro in more than three years as investors fled what is typically considered a key haven currency, though it later pared some of its losses.

In a more worrying sign of cracking investor confidence in the US economy, the yield on the 10-year US Treasury bill rose sharply above 4.5 percent as its price tumbled.

John Higgins, chief markets economist at Capital Economics, said it was a sign of “concern that China might dump its vast holdings of Treasuries” even if that risked losses for Beijing and driving the yuan higher against the dollar.

With Treasuries being sold off, sending their yields higher and making US debt more expensive, there is a fear of a bigger exodus from American assets down the line.

JPMorgan Chase CEO Jamie Dimon on Friday rejected the notion that US Treasuries were no longer a haven.

“If you’re going to invest your money in something, America is still a pretty, pretty good place in this turbulent world,” Dimon said in a conference call after his bank reported hefty first-quarter profits and revenue.

- Gold record -

The weaker dollar and the rush for safety sent gold to another record high, while oil prices gained in response to US pressure on crude exporter Iran.

“There remains considerable uncertainty around the impact of tariffs on economies and company earnings, and that could keep markets volatile for some time,” said Russ Mould, investment director at AJ Bell.

In Asia, the Tokyo stock market shed three percent – a day after surging more than nine percent – while Sydney and Seoul were also in the red.

Hong Kong and Shanghai rose as traders focused on possible Chinese stimulus measures.

There were gains in Taipei and Ho Chi Minh City stocks as the leaders of Taiwan and Vietnam said they would hold talks with Trump.

- Key figures around 2100 GMT -

New York - Dow: UP 1.6 percent at 40,212.71 (close)

New York - S&P 500: UP 1.8 percent at 5,363.36 (close)

New York - Nasdaq: UP 2.1 percent at 16,724.46 (close)

London - FTSE 100: UP 0.6 percent at 7,964.18 (close)

Paris - CAC 40: DOWN 0.3 percent at 7,104.80 (close)

Frankfurt - DAX: DOWN 0.9 percent at 20,374.10 (close)

Tokyo - Nikkei 225: DOWN 3.0 percent at 33,585.58 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 20,914.69 (close)

Shanghai - Composite: UP 0.5 percent at 3,238.23 (close)

Euro/dollar: UP at $1.1359 from $1.1201 on Thursday

Pound/dollar: UP at $1.3088 from $1.2970

Dollar/yen: DOWN at 143.49 yen from 142.46 yen

Euro/pound: UP at 86.80 pence from 86.36 pence

Brent North Sea Crude: UP 2.3 percent at $64.76 per barrel

West Texas Intermediate: UP 2.4 percent at $61.50 per barrel

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