THE ongoing wranglings in Westminster might have helped send the pound down to levels not seen for 34 years, but it was events taking place outside the UK that seemed to spook the markets most on Tuesday.

The FTSE 100 closed the day down 13.75 points at 7,268.19, which was surprising considering it usually rises when the pound falls against the dollar.

Analysts said markets were particularly nervous over the latest round of tariffs imposed on China by US president Donald Trump and his administration.

European indexes also fell, with the French Cac down 0.49% and the German Dax off by 0.36%.

Connor Campbell, financial analyst at SpreadEx, explained: "The implementation of the latest round of tariffs on Chinese goods by the US has seemingly acted as a reminder that the situation remains ugly between the two superpowers."

He also pointed out that the ISM manufacturing data from the US showed the sector had fallen into contraction.

The impact the trade war is having is leading to analysts and economists to write down their growth predictions and suggestions of a worldwide recession.

Researchers at Radobank said: "The trade negotiations between the US and China hit a new low with another round of tariffs.

"In a first reaction, we reduced our global growth forecasts and are now forecasting a moderate global recession in 2020-2021, ie global growth coming in below 3%, on top of the US recession in (the second half of) 2020 we had already pencilled in."

But the pound certainly played its part on the London markets, with a pound worth $1.2089. This was up 0.17% on the day, as the Government's position on a general election became slightly clearer, but it remains at historic lows.

Against the euro, the pound reversed losses of recent weeks, up 0.23% at 1.1024.

In company news, The Restaurant Group said it is looking to close several Chiquito and Frankie & Benny's sites to stabilise its long-term future after posting hefty losses. Shares dropped 18.8p to 135.4p.

Plumbing giant Ferguson announced plans to break up and create a separate UK business, as it also confirmed the departure of its top boss.

The firm said that it will split off its UK operations as Wolseley UK following a lengthy strategic review of the group. Shares closed up 130p at 6,270p.

Lloyds Banking Group fought off rivals to snap up Tesco Bank's mortgage business for around £3.8 billion. Shares in Lloyds closed down 0.73p at 49.59p. Tesco was up 0.8p at 225p.

Amateur lenders on peer-to-peer lending platform Funding Circle are facing waits of 100 days to cash out of their loans, it has emerged, adding more problems to the struggling business. Shares closed down 1p at 110.2p.

And Just Eat faced a setback in its merger attempts with, after Eminence Capital, which has a 4.4% stake in the former, said it would be blocking the deal, saying the "financial terms are grossly inadequate to JE shareholders despite a sound strategic rationale for the merger".

The biggest risers on the FTSE 100 were Fresnillo up 18p to 764p, Micro Focus up 26.2p to 1,113.8p, Ferguson up 130p to 6,270p and Associated British Foods up 38p to 2,324p.

The biggest fallers on the FTSE 100 were Auto Trader Group down 24p to 508.6p, DS Smith down 11.9p to 329.7p, Informa down 25.2p to 849.6p and Just Eat down 21.4p to 754.4p.