CATCo Share News (CAT)

* Dow in negative territory for the year

* Dudley: 4 rate hikes this year in line with "gradual"message

* Trump announcement on tariffs raises trade war fears

* Indexes down: Dow 1.7 pct, S&P 1.3 pct, Nasdaq 1.3 pct(Updates to close)

By Caroline Valetkevitch

NEW YORK, March 1 (Reuters) - The Dow and S&P 500 registereda third straight day of more than 1 percent declines on Thursdayafter President Donald Trump said the United States would imposeimport tariffs on steel and aluminum, raising concern abouthigher prices and a trade war.

The declines put the Dow into negative territory for theyear and drove the Cboe Volatility Index to its highestclose since Feb. 13, denting the market's recent recovery fromdeep losses in early February.

Shares of auto makers and other big consumers of steel andaluminum added to their session losses after Trump said theUnited States would impose tariffs of 25 percent on steelimports and 10 percent on imported aluminum next week, whileshares of U.S. steel and aluminum companies jumped.

On the day, General Motors Co shares lost 4 percent,while Ford Motor Co was down 3.0 percent. U.S. Steelshares rose 5.7 percent.

Industrial heavyweights like Boeing and Caterpillaralso fell as investors worried about higher raw materialcosts and trade barriers elsewhere. Boeing was down 3.5 percentand Caterpillar was down 2.8 percent.

"It's always a concern about what's the retaliatory responseto this. Underlying all of these trade issues here, when youhave trade wars, is again fueling inflation, because presumablyprices are going to be higher," said Chuck Carlson, chiefexecutive officer at Horizon Investment Services in Hammond,Indiana.

Rising inflation and bond yields were the main concerns asWall Street ended a turbulent February on Wednesday, with theDow and S&P 500 capping their worst months since January 2016.

The Dow Jones Industrial Average fell 420.22 points,or 1.68 percent, to 24,608.98, the S&P 500 lost 36.16points, or 1.33 percent, to 2,677.67 and the Nasdaq Compositedropped 92.45 points, or 1.27 percent, to 7,180.56.

The S&P 500 is down 3.7 percent since Monday's close.Thursday's fall marked its third straight day of declines, thefirst such streak for the index since January 2016.

Last month confirmed a 10-percent correction for the S&P,which is still down more than 6 percent from its Jan. 26 recordhigh.

Stocks had mostly traded lower before Trump's announcement.

Federal Reserve Chairman Jerome Powell tried to temperremarks he made on Tuesday that raised concerns about thepotential for four interest rate hikes this year rather than theFed's forecast of three, but New York Fed President WilliamDudley, speaking in Sao Paulo, Brazil, was a bit more pointedand said four rate hikes would be "gradual".

But investors said it was the tariff issue that drove themarket in its afternoon selloff.

"The risk to imparting these tariffs is that it invites aretaliatory response from our trading partners and particularlyChina," said Mark Luschini, chief investment strategist atJanney Montgomery Scott in Philadelphia.

Declining issues outnumbered advancing ones on the NYSE by a1.47-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and 25 new lows;the Nasdaq Composite recorded 43 new highs and 100 new lows.

About 9.0 billion shares changed hands on U.S. exchanges.That compares with the 8.4 billion daily average for the past 20trading days, according to Thomson Reuters data.

(Additional reporting by Lewis Krauskopf in New York and SruthiShankar and Parikshit Mishra in BengaluruEditing by Nick Zieminski and James Dalgleish)