The blue-chip index slipped 1.8%, while the midcap FTSE 250 index's fall was limited to 1% on the back of a 15% surge in miner Centamin after Canada's Endeavour Mining revealed a $1.9 billion buyout proposal.
Diversified miner Glencore was among steepest fallers on the main board, tumbling 4% as investors were unimpressed by an update on the company's priorities and expected output.
In a broad sell-off, every sector in the main index recorded losses after Trump said an agreement with Beijing might have to wait until after the U.S. presidential election in November 2020.
Asia-facing financial stocks, led by a 2.3% drop in HSBC, and oil majors Shell and BP were among those hardest hit due to the trade jitters.
"This insouciance about the prospect of putting off any deal has completely upended market expectations that we were potentially millimetres away from a deal, and also flies in the face of the optimism that has seen markets rally strongly over the last few weeks," CMC analyst Michael Hewson said.
The mood had already started to sour this week as Washington's tariffs on steel and aluminium imports from key Latin American trading partners and Trump's threat to slap separate tariffs on France and the European Union rekindled fears of global trade tensions.
Reflecting that, the FTSE 100 is headed for its worst monthly performance since August despite being just days into the final month of the year.
On Tuesday, the bourse also underperformed its European counterparts, with its dollar-earners falling further due to a rise in sterling after a new poll showed the Conservative Party widening its lead before an election next week.
Among midcaps, Centamin shares marked their biggest one-day climb in four-and-a-half years even as the British firm rejected Endeavour's takeover approach.
"We believe the Endeavour all-share merger proposal for Centamin would provide the management and operational direction Centamin has lacked for the past two years," Peel Hunt analysts wrote.
In other news-driven moves, Cineworld lost 4% after the cinema chain warned on its annual trading performance.
For a graphic on Centamin vs gold:
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Sherry Jacob-Phillips and Alex Richardson)
By Muvija M and Shashwat Awasthi