Updates after market close

April 3 (Reuters) - London shares plunged on Thursday, as investors avoided risky assets after U.S. President Donald Trump's reciprocal tariffs amplified global trade war and recession worries.

The blue-chip FTSE 100 .FTSE touched a two-month low, closing down 1.6%, posting its largest daily drop since August 2024.

The midcap FTSE 250 index .FTMC fell 2.2%, hitting a one-year low.

Trump's new tariffs announced on Wednesday set a baseline of 10% for all imports and higher duties on some of the biggest trading partners of the U.S., crystallizing the global markets' fears of economic stagflation.

However, London said a trade deal with the U.S. is close, aiming to reduce the impact of new levies that could lead to a global trade war and harm its economy.

On Wednesday, the UK published a 400-page list of U.S. goods it could include in any possible retaliatory tariff response to Trump's tariffs on British imports.

Investors added to bets on Bank of England interest rate cuts with government bond yields falling sharply after the tariffs announcement.

UK banks' shares .FTNMX301010 fell 7.6%, tracking losses of European peers, as tariff concerns stoked worries about economic growth of the world's largest economy.

HSBC Holdings HSBA.L and Barclays BARC.L were among the top losers on the blue-chip index, falling 8.9% and 8.7% respectively.

Meanwhile, sterling hit a six-month high against the dollar, making the export-heavy index less attractive and adding to the losses.

Personal goods .FTNMX402040 led the sectoral declines, down 10.6%, touching the lowest in six months.

Burberry BRBY.L and Watches of Switzerland Group WOSG.L slipped 10% and 13.5% respectively, mirroring losses in European luxury companies after Trump's new tariffs impacted key luxury markets in the EU and Switzerland.

Industrial metal miners .FTNMX551020 stocks were down 5.3% as base metals fell and copper hit a one-month low on fears the new U.S. levies would affect industrial demand for metals.

On the flip side, utilities .FTUB6510 shares, often traded as a bond proxy owing to their stable income regardless of economic situation, touched a near six-month high, gaining 4.2%.

Pharma .FTNMX201030 stocks were up 1.6% as they survived a market rout on temporary tariff exemption of pharmaceutical products.

Among individual stocks, Currys CURY.L jumped 14.9% after the electricals retailer raised annual profit forecast.

(Reporting by Ragini Mathur and Sanchayaita Roy in Bengaluru; Editing by Mrigank Dhaniwala, Alexandra Hudson)

((Ragini.Mathur@thomsonreuters.com;))

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