My new kitten is terrifying my Mtif!?

Yes I know this sounds very funny and I must admitt it can be humurous. But its getting to be a big problem. I have a 6 year old English Mtiff named Duke and we just brought home an 8 weeks old kitten 3 days ago his name is London. The kitten is a mix breed nothing fancy. My dog has been around cats before and when he was young he was terrified of them. Litterally would pee at the mear glimps of a cat. Now he is 120 lbs and really wants to be friends with the new addition. The problem is London had never seen a dog before we brought him home. We kept him in the spare room the first day and when he started to feel comfortable we would let him out to roam while Duke was outside. Then we put a baby gate in the door way of the spare room where London was and let Duke sniff him out. The first time London saw Duke he was sitting on my lap. He flipped out so bad I am letterally covered in band aids. This and Duke was in another room and 15 feet away. Now London has figured out that Duke is afraid of him and he chases Duke all over the house. Now my Duke is big and clumsy and wouldn't hurt a flea. I can't allow him to be terrorized! This is his home, but I want London to stay too. Does anyone know what I can do? I don't know how to train a natural response out of a kitten. I mean its not like I can punish him for hissing and spitting. So should I do anything when the cat freaks out? Or should I just praise the good?