1x Msft Share News (MSFT)

* Dow, S&P and Nasdaq all drop more than 1.5 pct

* Trump plans tariffs on $50 bln worth of China imports

* Industrials tumble: Boeing, Caterpillar down 3.5 pct

* Rate-sensitive REIT and utilities sectors gain

* VIX jumps to three-day high; Treasury yields drop(Changes comment, adds details, updates prices)

By Sruthi Shankar

March 22 (Reuters) - The three major U.S. indexes fell morethan 1.5 percent on Thursday, on track for their steepest dropin six weeks, gripped by the growing threat of a global tradewar.

President Donald Trump was expected to lay the foundationfor tariffs on Chinese imports worth around $50 billion, a movelikely to trigger retaliation from Beijing. The presidentialmemorandum is expected to be signed at 12:30 p.m. ET.

China is preparing a range of responses and has threatenedto retaliate by hitting U.S. agricultural exports.

"The markets should dislike the possibility of a trade warbetween United States and other countries," said Stephen Wood,chief market strategist for Russell Investments in New York.

"However, there's a lot of negotiation taking place there.Suddenly we're seeing smaller numbers and exemptions."

Still, major industrials Boeing and Caterpillarfell more than 3.5 percent.

Nine of the 11 major S&P sectors were in the red, with fiveof them down more than 2 percent. Only the interest-ratesensitive utilities and real estate sectorswere higher after the Federal Reserve raised interest rates, aswas widely expected, on Wednesday.

The Fed forecast at least two more hikes for 2018, also asexpected. But nearly half of the policy makers projected threemore this year and the pace of increases is seen quickening inthe next two years, ending the years-long easy-money policy.

"What we've got is a strong risk-off trade, which I think isa follow on to the comments from (Fed Chair Jerome) Powell andsome of the Facebook issues," said Paul Norte, portfolio managerat Kings view Asset Management in Chicago.

"Investors are looking to take some money off the table."

At 11:50 a.m. ET, the Dow Jones Industrial Averagefell 446.9 points, or 1.81 percent, to 24,235.41. The S&P 500lost 44.65 points, or 1.65 percent, to 2,667.28 and theNasdaq Composite dropped 135.21 points, or 1.84 percent,to 7,210.08.

The Cboe Volatility Index, the most widely followedbarometer of expected near-term volatility in the S&P 500, wasup 3.25 points at 21.11, after touching a three-day high of21.24.

U.S. treasury prices gained as the fears of a trade war sentinvestors to safe-haven investments.

The S&P 500 technology index, the best performingsector over the past year, fell 1.63 percent. Apple,Microsoft, Amazon and Alphabetdropped 0.9 percent to 3 percent.

Facebook shares fell 1.5 percent, reversing courseafter brief gains early in the session.

AbbVie slumped about 11 percent after the drugmakersaid it would not seek accelerated approval for its experimentallung cancer treatment based on results from a mid-stagestudy.

Declining issues outnumbered advancers on the NYSE for a2.79-to-1 ratio, and for a 3.05-to-1 ratio on the Nasdaq.(Reporting by Sruthi Shankar in Bengaluru; Editing by Dan Burnsand Savio D'Souza)