World markets have seen red after Donald Trump downplayed the chances of reaching a deal to end the US-China trade war before the need of the year.
Shares either side of the Atlantic fell after the US president signalled an agreement may have to wait until after the race for the White House in November 2020.
Investors had been hoping the US and China would end trade tensions, which have strained ties between the world’s two biggest economies since 2017 when Mr Trump took office.
US officials had previously said a deal could happen this year, depending on China.
But speaking in London where he is attending a meeting of NATO leaders, Mr Trump said: “I have no deadline, no.”
He also stated that he “likes” the idea of “waiting until after the election for the China deal”.
Relations between the two nations had already suffered a setback after Mr Trump signed a bill in support of pro-democracy protesters in Hong Kong.
There have been further market jitters with France and the EU saying they were ready to retaliate if Mr Trump carried out his threat to slap tariffs on French products, including champagne and cheese.
The American leader has warned he could impose levies in response to a new French tax on big US tech firms.
In response to developments, the top flight FTSE 100 index closed the day down by 1.75%.
Only a handful of UK-based blue chip firms rose, with multinational steel firm Evraz leading the fallers after slumping more than 7%.
The FTSE was also impacted by the strengthening value of the pound, which rose after UK construction activity improved in November, despite still shrinking.
A stronger pound tends to hurt the value of the index’s dollar-earning constituents as they get less for their US currency when they book it in the UK.
Meanwhile, France’s CAC 40 index fell 1%.
Stateside, the Dow Jones ended the day down 1%, while both the S&P 500 and tech-heavy Nasdaq saw falls of 0.7%.
Asian markets were also squeezed by trade fears, with Japan’s benchmark Nikkei 225 losing 0.6%.
Neil Wilson, chief market analyst at Markets.com, said: “Equity markets in Europe and US futures were hit as Donald Trump upped the ante again on trade, warning that there is no deadline for doing a deal with China and that it’s probably better to wait until 2020 and even after the November presidential election to agree terms.
“Combined with the barrage of tariff threats on the EU, the comments can be taken as a sign that the White House has no qualms about levying further tariffs and is happy about using trade as a economic, political and diplomatic weapon.
“Of course, Donald Trump’s shoot-from-the-hip comments in these kind of interviews need to be taken with a dose of salt.”