The FTSE 100 has plunged lower after Donald Trump threatened to slap hefty tariffs on France and the EU.
The index slid to its lowest level since late October after the renewed threat of tariffs stoked fears that it could impact UK-EU relations.
London’s top flight, which predominantly consists of international-focused firms, dived more than 134 points to 5,151 points on Tuesday afternoon, in its biggest decline for two months.
Global trading sentiment was also knocked on Tuesday as President Trump raised fresh doubts over the US-China trade deal.
Over the past two months, the FTSE and major European markets had strengthened on optimism over a calm in trade tensions between the two global powers.
But Mr Trump stoked new concerns at a London press conference, stating that he “likes” the idea of “waiting until after the election for the China deal”.
Only a handful of UK-based blue chip firms have risen, with multinational steel firm Evraz leading the fallers after slumping more than 7%.
Combined with the barrage of tariff threats on the EU, the comments can be taken as a sign that the White House has no qualms about levying further tariffs
Neil Wilson, chief market analyst at Markets.com, said: “Equity markets in Europe and US futures were hit as Donald Trump upped the ante again on trade, warning that there is no deadline for doing a deal with China and that it’s probably better to wait until 2020 and even after the November presidential election to agree terms.
“Combined with the barrage of tariff threats on the EU, the comments can be taken as a sign that the White House has no qualms about levying further tariffs and is happy about using trade as a economic, political and diplomatic weapon.
“Of course, Donald Trump’s shoot-from-the-hip comments in these kind of interviews need to be taken with a dose of salt.”
The FTSE 100 was also impacted by the strengthening value of the pound, which rose after UK construction activity improved in November, despite remaining in contraction.
The value of the pound rose by 0.45% to 1.299 against the dollar and it rose 0.37% to 1.172 against the euro.