A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration

SAN FRANCISCO (Reuters) - S&P 500 futures dropped 1.2% late on Monday after the U.S. Treasury Department labeled China as a currency manipulator.

The U.S. government has determined that China is manipulating its yuan currency, and will engage with the International Monetary Fund to eliminate unfair competition from Beijing, U.S. Treasury Secretary Steven Mnuchin said in a statement.