FTSE sinks as Chinese tariffs hit US goods

London’s top flight has slumped to a two-month low after China announced tariffs on the US as tensions between the two global powers escalated.

The FTSE 100 fell by 39.61p to 7,163.68p as any optimism from Friday that the trade spat could be resolved quickly evaporated.

Michael Hewson, chief market analyst at CMC Markets UK, said: “Concerns about further escalations in the China-us trade narrative turned ver y quickly into reality as China announced a raft of new tariffs on over 2,400 US goods.

“With the EU also threatening its own retaliation if President Trump implements tariffs on EU autos at the end of this week, stocks have seen valuations put into the paper shredder, with large falls across the board.” Uncertainty weighed down the pound, which fell 0.48 per cent to $1.295 against the dollar and lost 0.3 per cent to €1.153 versus the euro at the London market close.

In stocks,vodafone slipped following reports that the mobile op erator is set to reverse a pledge to investors and slash its dividend to pay for expensive auctions for mobile phone airwaves in Germany and Italy.

The reports suggest the firm will rein in its full-year payout at its annual results on Tuesday, despite signalling in November it would protect the dividend. Shares slumped by 7.2p to finished the day at 131.8p.

Meanwhile funeral provider Dignity’s shares suffered a fall after it warned over the impact of a 22,000 drop in the number of deaths so far in 2019. Its shares were 15p lower at 661p.