All sector constituents on the blue-chip FTSE 100 and the mid-cap FTSE 250 were in the red by 0805 GMT, with both indexes hitting a more than eight-week low.

Markets have been alarmed and investor sentiment damaged after President Donald Trump said last week he would slap 10% tariffs on $300 billion in Chinese imports, prompting China to vow retaliation.

Retailer Marks & Spencer and online supermarket Ocado fell about 4% each, following their online food venture deal that will result in the termination of Ocado's current deal with Waitrose.

AUGUST ANGST

"As we head into a new week, and a disappointing start to August, the big question is whether last week's sell-off is a one-off and a buying opportunity, or the start of a much bigger decline," CMC Markets analyst Michael Hewson said.

"Judging by the ferocity of the last two day's sell-off and today's further declines ... we look set to see some further August angst for investors."

The FTSE 100 in May posted its only monthly loss so far this year as the trade dispute escalated, before Washington and Beijing called for a truce. That, along with a slump in the pound over no-deal Brexit fears, has since helped the index post back-to-back monthly gains.

With investors shunning equities, gold prices jumped to their highest level in more than six years on Monday. Precious metals miner Fresnillo added 3.2% and was among a handful of blue-chip stocks in the black.

AIM-listed budget hotel chain easyHotel soared 35.5% to 95.5 pence after its board recommended a bid of 95 pence per share from a consortium of property funds.

Thomas Cook, whose shares soared almost 90% last week after the founder and owner of Turkish tour operator Anex Tourism Group built a stake in the company, surged 24% as it advanced for the fourth session in a row.