Updates with comment, prices

By Shashwat Chauhan and Purvi Agarwal

April 9 (Reuters) - U.S. stock index futures fell sharply on Wednesday after China announced more levies on U.S. goods, retaliating to President Donald Trump's reciprocal tariffs that took effect earlier in the day.

The world's second largest economy would impose additional tariffs of 84% on all U.S. goods from April 10, up from the 34% previously announced, China's finance ministry said.

As hopes of concessions faded and tariffs on dozens of countries began, investors ramped up their exit from stocks, industrial commodities and even government bonds.

At 07:21 a.m., Dow E-minis 1YMcv1 were down 517 points, or 1.37%, S&P 500 E-minis were down 1.21% to 4,959.75 and Nasdaq 100 E-minis NQcv1 were down 183.75 points, or 1.07%

The CBOE Volatility index .VIX - seen as Wall Street's 'fear gauge' - was last at 54.31 points, hovering nearing its highest since August.

"I do think that this is a game of 'chicken' in the sense that both sides are upping the barriers," said Peter Andersen, founder of Andersen Capital Management.

"What we're seeing now is a complete correlation between any news related to tariffs and the stock market reactions."

Prospects of tariff deals had lifted U.S. equities on Tuesday, sparking a rally early in the session, though gains were not sustained and all three major indexes closed down.

Since Trump unveiled his tariffs last Wednesday, the S&P 500 .SPX has shed more than $5.83 trillion in market value and will confirm a bear market, if it closes more than 20% below its record high. As of last close, it was down 19% from its peak.

Most megacap and growth stocks fell in premarket trading, with Apple AAPL.O down 1% and Meta Platforms META.O off 1.3%.

Oil prices fell to their lowest levels since February 2021, dragging top players Exxon Mobil XOM.N and Chevron CVX.N down over 2% each. SLB SLB.N was off 3.7%.

Meanwhile, government bond yields rose and prices dropped as rising fears of a U.S. recession boosted expectations of interest-rate cuts by the Federal Reserve. US/

The yield on the 10-year note US10YT=RR briefly jumped to its highest level since February and was last at 4.384%.

Traders see more than 100 basis points of easing by the December, implying four fully priced-in 25-basis-points cuts, according to LSEG data.

Minutes from the Fed's March policy meeting are due later in the day, while a consumer price inflation reading is set for Thursday, which could offer more clues on the inflation trajectory.

U.S. drugmakers slid after Trump reiterated plans for "major" tariffs on pharmaceutical imports. Eli Lilly LLY.N fell 3.3% and AbbVie ABBV.N 4.1%.

U.S.-listed shares of Chinese firms saw robust gains, tracking advances in their domestic peers as state holding companies and Chinese brokerages continued to support the market.

Among individual stocks, e-commerce giant Alibaba BABA.N gained 3.1% while the iShares MSCI China ETF MCHI.O added 3%.

Delta Airlines DAL.N gained 3.1% after beating estimates for first-quarter profit, despite flagging impact to travel demand from tariff-driven uncertainty.

(Reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Arun Koyyur)

((Shashwat.Chauhan@thomsonreuters.com;))