The FTSE 100 closed in the red on Wednesday, reversing gains made at the start of the week.
The blue-chip index was off 2.9 per cent. Pharma stocks drove losses on the back of fresh tariff threats from President Donald Trump.
Astrazeneca closed off seven per cent and GSK 5.7 per cent.
Lenders also suffered big losses. Barclays sunk 3.6 per cent and Standard Chartered 4.6 per cent.
Of the risers, JD Sports surged nearly 10 per cent after delivering a bumper trading update.
The global trade kicked into a new gear as China hit back at the US with 84 per cent retaliatory tariffs.
The Asian superpower accused the White House of “bullying” after it was hit with a combined 104 per cent levy. China’s Commerce Ministry insisted it would “fight to the end”.
The European Union also confirmed its the first strike back at the US. The 27-state bloc placed tariffs on €21bn (£16.4bn) of certain US exports, which reportedly include motor bikes, luxury boats and orange juice.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “At the moment this is shaping up to be a economic conflict without end, with little chance of negotiation or compromise in sight.
“China has no intention of backing down in the face of what it sees is US aggression. The internationally-focused FTSE 100 has dived deeper into the red, with losses accelerating following the retaliatory action.”
Elsewhere, Europe was swimming in the red.
Germany’s Dax closed down 2.96 per cent and France’s Cac 40 3.4 per cent.
On Wall Street, markets were volatile in early trading.
The Dow Jones shed 200 points on open before making marginal gains. Similarly, the S&P 500 slumped before clawing its way into the green.
The tech-heavy Nasdaq was up one per cent on open. After a bruising week, Apple managed to climb four per cent and Tesla three per cent.
Streeter added: “Trump’s moves are aimed at fracturing supply chains and ultimately reshoring US manufacturing.
“But that is a long-term process and in the short term it’ll mean big increases for importers and price rises for hugely popular electronic products, clothes and toys as higher costs are passed onto consumers.”