* FTSE 100 down 2.3%, FTSE 250 down 1.9%
* New threat from Trump on tariffs drives global falls
* Banks, miners, oil majors biggest drags
* RBS drops after warning on outlook
* British Airways owner IAG gains on profit beat (Updates shares, company news items)
By Muvija M and Shashwat Awasthi
Aug 2 (Reuters) - UK shares plunged to their lowest in a over a month on Friday after U.S. President Donald Trump threatened to hit China with more trade tariffs, while a Brexit-induced warning on targets knocked shares in Royal Bank of Scotland.
The FTSE 100 index slumped 2.3% on its worst day fo far this year, while the FTSE 250 midcap index weakened by 1.7%.
All of the major constituent sectors on both indexes ended with losses for the day.
Asia-focussed bank stocks, including HSBC, and oil majors Shell and BP led losses on the main index after Trump vowed to impose a 10% tariff on $300 billion worth of Chinese imports from Sept. 1.
Industrials Melrose and Ashtead, typically more exposed to global trade conditions, both lost about 5%.
RBS plummeted 6.5% to a seven-month low as it warned that deteriorating economic conditions before Brexit were likely to derail next year’s profitability and cost targets.
British Airways owner IAG, however, jumped 8.4% - its biggest one-day gain in eight years - after reporting strong profit numbers for the first half of its key summer period.
The last major escalation of the U.S.-China trade tensions was behind a sharp drop in the FTSE 100 in May, but the index is still on course for its biggest annual rise since 2016 as Brexit-driven weakness in the pound helps the index’s largely internationally-focused companies.
“Anyone trying to determine the next move in stock markets in the last 24 hours would be justified in feeling like they’ve just experienced a bit of whiplash,” said CMC Markets analyst Michael Hewson.
“It is not hard to underestimate how much this abrupt escalation has caught markets unawares.”
Miners slumped nearly 4% to a two-month low as Chinese iron ore futures dropped after Brazil announced a rebound in exports of the steelmaking material in July. The index, which includes global players Glencore and Rio Tinto, is on course for its steepest weekly fall since March.
The long-drawn out trade war has also weighed on the sector as China is the world’s top metals consumer.
Among a handful of gainers on the midcap index was Britain’s largest click and collect operator PayPoint, which jumped 7.2% after a deal with Deutsche Post’s DHL Parcel UK as the latter looks to expand its click and collect services.
Travel firm Thomas Cook surged 33%, a day after Nesat Kockar, the owner of Turkish tour operator Anex Tourism Group, disclosed a holding in the company.
Reporting by Muvija M and Shashwat Awasthi, additional reporting by Sangameswaran S in Bengaluru; Editing by Anil D'Silva and Raissa Kasolowsky