By Devik Jain and Sagarika Jaisinghani

Britain's FTSE 100 closed lower on Monday, as tensions between the United States and China over the origins of the coronavirus outbreak outweighed support from drugmakers and oil firms.

After falling nearly 1% at one point, the internationally-focussed FTSE 100 ended down 0.2% as a drop in the pound boosted some exporters. Midcap stocks fell 1.2%.

UK shares still outperformed continental European counterparts, which took a bigger hit on a return to trading after the May 1 holiday. [.EU]

After U.S. President Donald Trump revived tariff threats against China last week, Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" the virus emerged from a laboratory in the central Chinese city of Wuhan.

An editorial in China's Global Times said he was "bluffing".

"Investors are concerned about what that is going to mean for the U.S.-China relationship, the trade deals they've already got in place, and what that means for the wider economy," said Connor Campbell, financial analyst at SpreadEx in London.

Aero-engine maker Rolls Royce was among the biggest decliners, falling 6.9% on news it is considering cutting up to 15% of its workforce as customers slash production and airlines park planes due to a halt in global travel.

Travel and leisure stocks also fell, with shares in easyJet, British Airways-owner IAG and Intercontinental Hotels Group falling between 4.2% and 7.2%.

Broadcaster ITV declined 4.1% as it cancelled popular dating show Love Island because of the pandemic and said there would not be a new series until 2021.

A private survey showed Britain's largest companies expect the pandemic to reduce their sales by more than a fifth this year, a steeper slide than during the 2008-09 financial crisis.

Among other prominent fallers were banks, miners, insurers and advertising firms.

The FTSE 100 hit near two-month highs last week as economic stimulus measures and signs the pandemic was easing helped investors overlook dire economic data that highlighted the severe business damage already done.

However, fresh concerns on U.S.-China relations and the impact of the reopening of economies from lockdown kept investors guessing as to whether the recovery in equity markets had further room.

Oil majors Royal Dutch Shell and BP recovered from last week's slump, gaining 2.7% and 0.6% respectively even as oil prices were mixed. [O/R]

The wider pharmaceuticals and biotechnology index <.FTNMX4570> gained 2.5%, with Hikma jumping 5.9%.

All eyes this week will be on the Bank of England policy meeting on Thursday, although expectations are low for further stimulus after the central bank cut rates twice in March and ramped up its bond buying programme.

(Reporting by Sagarika Jaisinghani, Devik Jain and Sruthi Shankar in Bengaluru; Editing by Anil D'Silva and Mark Potter)