U.K. stocks closed sharply lower Friday, with the main index wrapping up the weakest month in three years as uncertainty over Brexit and U.S. trade policy once weighed on sentiment.

The FTSE 100 UKX, +0.34% fell 1.1% to 7,432.42, its third straight daily drop. The pound GBPUSD, +0.01% traded at $1.2975, compared with $1.3009 late Thursday.

For the week, the FTSE fell 1.9%, a decline that took it to its lowest close since April. For August, it fell 4.1%, its biggest decline since August 2015.

What drove trading?

The U.K.’s Brexit negotiations also remained in focus following a meeting between EU negotiator Michel Barnier and U.K. Brexit Secretary Dominic Raab, where they claimed progress, but found no agreement on the issue of the Irish border.

City A.M. late Thursday reported that EU member states were backing plans to give the EU’s chief Brexit negotiator more flexibility in order to settle the terms of the withdrawal agreement by the November deadline. Separately, The Times reported that French President Emmanuel Macron was pushing other EU leaders to make a deal with the U.K.

However, British foreign secretary Jeremy Hunt said he had thus far seen few signs of more openness to the U.K.’s proposals, the Guardian reported.

The seemingly positive reports came days after EU negotiator Michel Barnier reportedly said the bloc was willing to offer the U.K. an unprecedented partnership, “such as has never been with any other third country.” The news was taken as a sign that the U.K. may be able to avoid a “no-deal Brexit,” although the specifics remain to be seen and the negotiating process has been fraught with delays. Barnier also emphasized that the EU wouldn’t accept any deal that harms the single market.

Barnier’s comments pushed the pound sharply higher, which in turn weighed on U.K. multinational stocks.

Read more:How a ‘no-deal Brexit’ could play out for U.K. stocks

Separately, Bloomberg on Thursday reported that U.S. President Donald Trump wants to move ahead with his plan to slap tariffs on $200 billion in additional Chinese imports as early as next week. Companies have until Sept. 6 to comment on the proposed duties and Trump wants to impose the tariffs once that deadline passes.

In the same interview, Trump threatened to withdraw the U.S. from the World Trade Organization.

Separately, Trump rejected a recent offer from the EU to eliminate car tariffs if the U.S. did the same, calling it “not good enough.” In addition, U.S. and Canada officials remained apart on key points of contention in talks over a revised North American Free Trade Agreement, as they gathered for a fourth straight day to meet a White House-imposed deadline.

The tensions added to the geopolitical risk in the market, which is also fretting over Italy and the country’s high debt levels as it prepares a budget that could conflict with EU deficit rules.

What are market analysts saying?

“Trade threats seem to be becoming part of the landscape this summer and they keep knocking down markets across the globe,” said Fiona Cincotta, senior market analyst at City Index.

What stocks are in focus?

Whitbread PLC WTB, +0.48% surged 14% after Coca-Cola Co. KO, +0.04% said it would buy its coffee-shop chain Costa for $5.1 billion.

Sage Group PLC SGE, +0.05% said its chief executive officer had stepped down, and that its finance chief would step in on an interim basis. Shares fell 7.8%.