Tariff threats, travel stocks drag UK stocks lower

(Reuters) -The British benchmark index on Tuesday closed at its lowest level in nearly two months, dragged by declines in travel and leisure stocks, and as fresh U.S. tariff threats sparked volatility across various markets.

The blue-chip index FTSE 100 lost 1.2%, its sixth straight session of decline. It notched its lowest closing level since January 16.

The travel and leisure sector led sectoral declines with a 3.1% fall. British Airways owner IAG slumped 6.1% after Delta Air Lines flagged a weakening environment due to U.S. economic uncertainty.

Sterling rose about 0.5% against the dollar, adding to losses on the export heavy index.

Meanwhile, volatility sparked by U.S. tariff policy continued as President Donald Trump doubled planned tariffs on all imports of steel and aluminium products from Canada to 50%. He also threatened to "substantially increase" tariffs on cars coming into the U.S.

A British government official said Britain will not impose retaliatory trade tariffs in response to U.S. duties on all steel and aluminium imports, which are due to come into force on Wednesday.

The midcap FTSE 250 fell 0.5% to a two-months low.

Dominos Pizza's Group lost 3.6% in volatile trading, after forecasting annual core profit in line with expectations.

Meanwhile, the UK homebuilder sector rose 2.6%, led by a 5.5% gain in Persimmon after the company said it would build more homes while banking on the support provided by interest rate cuts by the country's central bank. 

Rotork Plc gained 7.1%, after the industrial group announced a deal to acquire South Korean electric actuator manufacturer Noah Actuation for 44 mln pounds ($56.8 mln) and announcement of a share buyback plan.

Earlier in the day, surveys of retailers and consumers showed that British consumer spending slowed last month. The British Retail Consortium reported a 1.1% year-on-year sales increase in February, down from January's 2.6% growth. 

(Reporting by Sanchayaita Roy in Bengaluru; Editing by Shailesh Kuber and Leroy Leo)