British stocks swept up in global selloff as trade war worries intensify

(Reuters) -British stocks plunged on Monday, extending their selloff from last week after U.S. President Donald Trump threatened to impose an additional 50% tariff on China, amplifying the trade war between the two major global economies.

The blue-chip FTSE 100 index dropped 4.4%, its weakest closing level in over a year. The domestically-focused midcap index fell 3.3%, to its lowest since November 2023.

British blue-chips have fallen more than 10% from levels seen before last Thursday, in line with the global equities selloff.

95 of the 100 stocks in the FTSE 100 closed lower, while most of the FTSE 350 sub sectors also closed down.

Pharma and biotech led losses amongst the major sub-indexes, bogged down by a near 7% fall in heavyweight AstraZeneca.

UK energy companies fell 4.8% as oil prices eased more than 1% to a near four-year low. Shell lost 4.5% after lowering its first-quarter LNG production outlook due to adverse weather conditions in Australia.

All eyes were on developments in the United States after Trump said on Sunday that investors would have to take their "medicine" when he was asked about the market selloff, adding that he would not make a deal unless the trade deficit with China is solved.

Prime Minister Keir Starmer said that Britain will fight to secure an economic partnership with the U.S. while also working to lower trade barriers with key partners around the world in the wake of Trump's tariffs.

As the economic uncertainty deepened, traders increased bets on the Bank of England cutting interest rates in May to near 100%, up from 50% before Wednesday's tariff announcement.

Gilt yields jumped, while the pound languished at a one-month low against the dollar.

Separately, British house prices unexpectedly fell in March, according to data from mortgage lender Halifax, the latest sign of a market cooling after a rush to buy homes ahead of the expiry of a tax break.

(Reporting by Ragini Mathur, Sanchayaita Roy and Shashwat Chauhan in Bengaluru; Editing by Tasim Zahid and Sharon Singleton)