GLOBAL MARKETS-Weak China trade hits world stocks, causes risk-off trade

(Updates with early U.S. markets activity, changes dateline, previous LONDON)

* U.S. stocks down in late-morning trading

* China Dec exports, imports unexpectedly drop

* U.S. Treasury yields on most maturities slipped

NEW YORK, Jan 14 (Reuters) - World stock indexes fell while the yen rose against the dollar on Monday after a shock contraction in Chinese trade reignited fears of a sharper slowdown in global growth and caused investors to sell riskier assets.

Copper prices fell and the Australian and New Zealand dollars also declined following the China news, which added to worries that U.S. tariffs on Chinese goods were taking a toll on the world's second-largest economy.

"The biggest theme (in the market today) is risk-off," said John Doyle, vice president of dealing and trading at Tempus, Inc.

Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5-percent rise. Exports dropped 4.4 percent, confounding expectations for a 3-percent gain.

For an interactive version of the following chart, click here https://tmsnrt.rs/2SRopIf.

The United States and China - the world's two largest economies - have been in talks for months to try and resolve their bitter trade war, with no signs of substantial progress.

Adding to the gloom were weak industrial output numbers from the euro zone, which showed the largest fall in nearly three years.

Softening demand has been felt around the world with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.

Trade-sensitive shares fell, including Boeing Co Caterpillar Inc, though U.S. stock investors also were on edge as the U.S. earnings season kicked off. "We're seeing some cautiousness heading into the beginning of earnings season as people are worried about guidance and what companies are going to say, especially in relation to trade," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

The Dow Jones Industrial Average fell 139.63 points, or 0.58 percent, to 23,856.32, the S&P 500 lost 16.99 points, or 0.65 percent, to 2,579.27 and the Nasdaq Composite dropped 63.27 points, or 0.91 percent, to 6,908.21.

Citigroup Inc shares were higher after the bank beat profit estimates as lower expenses offset a drop in quarterly revenue.

The pan-European STOXX 600 index lost 0.38 percent and MSCI's gauge of stocks across the globe shed 0.62 percent.

U.S. Treasuries tracked the European bond market, but were little changed in late-morning U.S. trading.

In the foreign exchange market, the Japanese yen, a safe-haven currency that benefits in times of geopolitical turmoil, strengthened against the U.S. dollar by 0.33 percent.

The Australian dollar, which was down 0.24 percent, and kiwi dollar, which was down 0.12 percent. China is Australia's largest trade partner.

COMMODITIES SUFFER

The prospect of slowing global growth also roiled some commodity markets. Industrial metals copper and aluminum lost ground in London and Shanghai.

Three-month copper on the London Metal Exchange was bid down 0.9 percent at $5,888 a tonne after failing to trade in official rings, its lowest level in more than a week.

Oil prices were down slightly. U.S. crude fell 0.54 percent to $51.31 per barrel. Brent crude, the international benchmark, fell 46 cents to $60.02 a barrel.

(Additional reporting by Kate Duguid in New York and Medha Singh and Karin Strohecker Editing by John Stonestreet and Nick Zieminski)