Trump trade war batters global stock markets

NEARLY £32bn was wiped off the value of the UK’s biggest firms after Donald Trump crushed hopes of an imminent trade deal with China and threatened to slap swingeing tariffs on France.

The FTSE 100 plunged to its lowest level since late October after the US President said there was little prospect of a US-China deal being made until after the presidential election next year.

Investors were also unnerved by the prospect of an escalating trade war between the US and the EU as the Trump administration threatened to impose £1.8bn of tariffs on French goods, from champagne to cheese.

London’s blue-chip index, which predominantly consists of firms plying most of their business overseas, fell 1.7pc, or 127.18 points, to 7158.76, having slumped as low as 7135 at one stage during the day.

Trading screens were red in Wall Street too, where the Dow Jones Industrial Average was 1.4pc lower by the time markets had closed in London.

The French Cac 40 finished 1pc lower, although the Dax in Germany eked out a slight gain, closing 0.2pc higher.

The US is preparing to impose tariffs of up to 100pc on dozens of French exports, also including make-up, homeware and kitchenware. It comes in retaliation against a new ‘digital services tax’ on internet giants including Google, Amazon and Facebook.

But analysts said that it was the delay of a trade deal with China which was principally to blame for sending shock waves through financial markets.

Michael Hewson, chief analyst at CMC Markets, said: ‘The prospect of putting off any deal has completely upended market expectations that we were potentially millimetres away from a deal, and also flies in the face of the optimism that has seen markets rally strongly over the past few weeks.’