FTSE 100 loses £45bn as trade war fears prompt biggest one-day fall of year

London’s blue chip index tumbled 2.24% or 172.43 points to end the day at 7,509.84 points, with similar losses logged across Europe where the French Cac 40 and German Dax slumped 1.9% and 2.4% respectively.

It was the largest one-day drop for the FTSE 100 since April 18 2017, when it fell 2.46%.

Major US indexes including the Dow Jones Industrial Average and S&P 500 were also down around 1.5% each in early trading.

Global stocks were suffering declines amid fears of an escalating global trade war centred on the relationship between the US and China.

Donald Trump’s administration in the US is now expected to announce plans to restrict Chinese investment across the country.

Fiona Cincotta, a market analyst at City Index, said: “Trade war fears appear to be ramping up almost daily. Initially traders were rather complacent that Trump’s threats were just a hardball negotiating tactic.

“However, he has more than proved that his intentions are far more serious and damaging; this realisation has struck market sentiment hard.”

The pound was also struggling to gain ground, trading flat against the US dollar at 1.326 and falling 0.1% versus the euro to trade at 1.134.

Brent crude prices slid by around 2% to $74.26 per barrel as profit-taking hit the oil market, which rose last week after an Opec meeting revealed plans for a smaller-than-expected rise in output from its members.

The cartel has been curbing production in recent years amid fears of a global energy glut.

In UK stocks, Tesco fell 0.6p to 261.1p as the grocer said it would scrap its “Brand Guarantee” price-matching scheme, with plans to instead focus on lowering prices of everyday products.

Shares in HSBC were down 18.6p at 702.3p.

It came as the bank confirmed the retirement of finance director Iain Mackay, who will step down after a total of 11 years at the lender.

He will be replaced by RBS finance chief Ewen Stevenson.