By Julien Ponthus and Helen Reid
LONDON (Reuters) - British shares suffered their worst trading day since February as a global sell-off caused by an escalating trade dispute between the United States and China hit global markets on Monday.
The FTSE 100 closed down 2.2 percent, with financials, energy and material stocks weighing on the British blue chip index.
"It does seem to us that the time has probably come whereby all things very exposed to global trade flows will begin to underperform perhaps quite sharply," wrote Neil Campling of Mirabaud Securities.
Losses accelerated across Europe after trading began on Wall Street and the Nasdaq lost more than 2 percent after U.S. President Donald Trump announced plans to bar Chinese companies from investing in U.S. technology firms and block additional technology exports.
Micro Focus had the second-worst performance with a 5.2 percent fall as Europe's tech sector took a hit from the trade spat.
Cruise operator Carnival's shares took the biggest hit, down 11.1 percent as it cut its earnings forecast.
Heavyweights BP and Royal Dutch Shell were down 3.4 percent and 2.6 percent as oil prices gave back gains made on Friday following an output agreement between major oil exporters.
Financials were also a drag for the index with HSBC, Prudential and Lloyds down 2.6 percent, 3.9 percent and 1.4 percent respectively.
Miners Glencore, Rio Tinto and BHP Billiton were down between 3.3 percent and 4.7 percent with Mike van Dulken and Artjom Hatsaturjants at Accendo Markets noting "weaker commodities providing a hindrance to FTSE Energy and Mining names".
Among smaller stocks, Britain's largest estate agent Countrywide tumbled about 30 percent after it lowered its half-year adjusted core earnings forecast, citing a sluggish market, and said it planned to issue more equity to cut debt.
British serviced office provider IWG jumped 3.2 percent after it said it was evaluating a possible cash offer from private equity firm Terra Firma.
(Editing by Robin Pomeroy)