June 25, 2018 / 3:47 PM / 5 months ago

US STOCKS-Wall Street drops as trade fears keep investors on edge

* U.S. plans limits on Chinese investment in tech firms

* Harley Davidson sees extra costs due to EU tariffs, shares drop

* Oil drops after recent run-up, drags energy stocks lower

* Indexes down: Dow 1.15 pct, S&P 1.18 pct, Nasdaq 1.81 pct (Changes comment, adds details, updates prices)

By Sruthi Shankar

June 25 (Reuters) - Wall Street fell on Monday, with technology and industrials bearing the brunt of an escalating trade dispute between the United States and other leading economies.

The U.S. Treasury Department was drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. technology firms, a government official said on Sunday. A Wall Street Journal report also said the U.S. planned to block additional technology exports to China.

U.S. Treasury Secretary Steven Mnuchin dismissed the reports saying the move will not be specific to China but would apply “to all countries that are trying to steal our technology”.

Technology stocks were most impacted, with the S&P technology index falling 2 percent. The Philadelphia Semiconductor index dropped 3.2 percent, with chipmakers taking a hit as they depend on China for a large part of their revenue.

Harley-Davidson tumbled 5 percent after the motorcycle maker forecast additional costs due to European Union tariffs.

Trump, last week, threatened to impose a 20 percent tariff on all European Union car imports. The EU — which has promised retaliatory measures on Harley-Davidson, bourbon and other products — vowed to respond.

“Investors are now beginning to worry that this heated rhetoric is something that will last for a while and could actually lead to disruption of trade,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

“They want to stick with equities, but rather hide out from areas most likely to be adversely affected by a pick up in trade tensions.”

At 11:12 a.m. ET the Dow Jones Industrial Average was down 283.65 points, or 1.15 percent, at 24,297.24, the S&P 500 was down 32.41 points, or 1.18 percent, at 2,722.47 and the Nasdaq Composite was down 139.39 points, or 1.81 percent, at 7,553.43.

Brent crude prices fell about 1.7 percent as traders factored in an expected output increase agreed at the OPEC meet on Friday. The S&P energy index was down 1.9 percent.

Eight of the 11 major S&P sectors were lower, with gains only in defensive utilities, consumer staples and telecoms.

Campbell Soup was the biggest percentage gainer on the S&P 500, rising 10.4 percent after a New York Post report that Kraft Heinz was considering buying the company.

Declining issues outnumbered advancers for a 3.73-to-1 ratio on the NYSE and for a 3.65-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and 16 new lows, while the Nasdaq recorded 40 new highs and 45 new lows. (Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

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