GLOBAL markets were rocked by trade tensions on Monday after Brussels warned it would slap tariffs on $300 billion (£228.5bn) of US imports.
The FTSE 100 was down 1.17 per cent or 89.08 points by the market close to 7,547.85, while the Cac 40 in France fell by 0.88%.
Across the pond, the Dow Jones Industrial Average and S&P 500 were down by 0.45% and 0.33% respectively.
In Germany, traders took a poor view of the political upheaval in Angela Merkel's coalition government, with the Dax falling by 0.55% in afternoon trading.
Fiona Cincotta, senior market analyst at City Index, said: "The FTSE fell sharply on the open, maintaining losses across the session as investors are no longer showing interest in buying the dips.
"With trade war fears intensifying and commodities on the back foot, not even a significantly weaker pound was sufficient to lift the FTSE as risk-off moves dominated."
The pound was down 0.63% against the dollar at 1.312. Against the euro, sterling was up 0.27% at 1.131.
Brent crude prices were also hit following comments made by Donald Trump at the weekend.
The US president suggested that Saudi Arabia had agreed to increase output. Brent crude prices were 1.9% lower at $77.700 a barrel.
Data on Britain's manufacturing sector showed activity edged up in May, but the industry remains "subdued" as Brexit uncertainty and trade war fears continue to weigh.
In UK stocks, British software giant Micro Focus International was the top riser on the FTSE 100 after it said it was selling its Linux operating system business for $2.5bn (£1.9bn).
The SUSE division - a business to business operating system service company - is being snapped up by Swedish private equity firm EQT just four years after being acquired by Micro Focus as part of its takeover of the Attachmate Group. Shares climbed 20p to 1,343.5p on the news.
Tesco's shares were flat after the retailer said it will form a "strategic alliance" with French retailer Carrefour as part of efforts to cut prices and get a leg up on competitors. Shares were down 0.6p to 256.1p.
Oasis Management, the activist investor calling for the head of Premier Foods' chief executive Gavin Darby, has claimed it has candidates chomping at the bit to head up the Mr Kipling cake firm.
The shareholder is calling for the removal of Mr Darby, who it says has presided over five years of value destruction. Shares in the company were up by 0.45p to 38.35p.
Purplebricks' shares were hit after it said it was expanding its North American footprint and making its first foray into the Canadian market through a £29.3 million deal.
The estate agent will take over DuProprio/ComFree (DPCF), which owns and operates a commission-free real estate service network with an online offering that Purplebricks said mirrors some of its own services. Shares fell 15.2p to 310p by the close.
Eve Sleep's market value more than halved on Monday after the firm announced the shock departure of its chief executive and said it will not hit profit targets.
The mattress company, which floated on the London Stock Exchange last year, said Jas Bagniewski was leaving the business with immediate effect. By the market close, Eve Sleep's shares plummeted 57.3% or 39.5p to 29.5p.
The biggest risers on the FTSE 100 were Micro Focus International up 20p to 1,343.5p, Ocado up 14.5p to 1,042p, Reckitt Benckiser up 83p to 6,322p, and Marks and Spencer up 3.4p to 298.5p.
The biggest fallers on the FTSE 100 were Smith & Nephew down 56.5p to 1,341.5p, NMC Health down 132p to 3,450p, Glencore down 12.7p to 349.3p and Antofagasta down 33p to 957p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here