(Corrects third bullet point to say "Fed minutes," not "Fed meeting"; corrects first sentence to say Fed policies this week, not Fed meeting this week; corrects 14th paragraph to show why market awaiting insight on Fed's policy thoughts)
* U.S., European chipmakers fall sharply on supply chain concerns
* Oil prices rise as OPEC says to maintain production cuts
* Dollar holds steady before this week's Fed minutes
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Herbert Lash
NEW YORK, May 20 (Reuters) - Global equity markets fell on Monday as a U.S. crackdown on China's Huawei Technologies led chipmaker stocks in Europe and on Wall Street to slide on fears of a widening trade war, while the dollar was steady before fresh insight on the Federal Reserve's interest rates policies this week.
Asian shares managed to reverse some of last week's losses after Washington said it would lift tariffs in North America, but fresh Chinese trade comments sank that sentiment.
China accused the United States of harboring "extravagant expectations" for a trade deal, underlining the gulf between the two sides as the U.S. action last week against Huawei began to hit the global tech sector.
Alphabet Inc's Google suspended some business with Huawei, Reuters reported, and Lumentum Holdings Inc, a major supplier of Apple Inc's face ID technology, said it had discontinued all shipments to Huawei.
German chipmaker Infineon said it has continued most shipments to Huawei, denying a report in Japan's Nikkei daily that it had suspended deliveries to the Chinese firm.
Technology stocks are a big driver of equity market returns so concerns about a slowdown in the sector weigh on investor sentiment, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
"The volatility that we're seeing today is a direct result of President Trump's threats to Huawei," Arone said. "The challenge is, there are no near-term trade meetings to provide a positive catalyst to this discussion," he said.
Apple's shares fell 3.0%, Lumentum Holdings fell 2.46%, Infineon lost 4.56% and Franco-Italian chipmaker STMicroelectronics tumbled 9.18%.
The PHLX Semiconductor Index of 30 U.S. industry-related companies fell 3.28%.
Shares of Sprint Corp and T-Mobile US Inc jumped after they announced changes to their proposed $26 billion merger, while U.S. regulators were expected to announce an agreement on the conditions necessary to approve the deal, sources said.
Sprint surged 24.19% and T-Mobile gained 5.49%.
The pan-European STOXX 600 index lost 1.04% and MSCI's gauge of stocks across the globe shed 0.39%.
On Wall Street, the Dow Jones Industrial Average fell 76.15 points, or 0.3%, to 25,687.85. The S&P 500 lost 12.85 points, or 0.45%, to 2,846.68 and the Nasdaq Composite dropped 95.13 points, or 1.22%, to 7,721.15.
The dollar was little changed but maintained last week's gains as investors held off on big moves while awaiting developments in U.S-China trade negotiations and for insight on Wednesday of the Fed's thinking on interest-rate policy with the release of the minutes from the Fed's last policy meeting.
The dollar index fell 0.08%, with the euro up 0.12% to $1.1169. The Japanese yen weakened 0.09% versus the greenback at 109.96 per dollar.
U.S. Treasury yields slipped, with long-dated debt falling for a second straight session as risk appetite diminished amid the ongoing U.S.-Sino trade tensions.
Volume was generally light, with very little economic data scheduled this week. The highlight is expected to be the release on Wednesday of the Fed's minutes from its last monetary policy meeting. Analysts do not expect surprises from the minutes.
The benchmark 10-year U.S. Treasury note fell 2/32 in price to yield 2.3997%.
Huawei, the world's largest telecoms equipment maker, was officially added to a trade blacklist by the Trump administration on Thursday, escalating the already bitter trade war, while China on Monday accused the United States of harboring "extravagant expectations" for a trade deal.
Oil prices rose to multi-week highs as the Organization of the Petroleum Exporting Countries indicated it was likely to maintain production cuts that have helped boost prices, while escalating Middle East tensions provided further support.
Brent crude futures rose 38 cents to $72.59 a barrel and U.S. West Texas Intermediate crude futures gained 56 cents to $63.32 a barrel. (Reporting by Herbert Lash; Editing by Dan Grebler)