Stock markets have fallen sharply as traders worry about Donald Trump's latest threat to ramp up trade tariffs on China.

London's FTSE 100 Index was down by 120 points, or 1.6% - wiping about £30bn off the combined market values of its constituent companies in what was the biggest one-day fall since March.

In New York, the Dow Jones Industrial Average fell nearly 500 points, or nearly 2%, while Germany's Dax and France's Cac 40 each shed 1.6%.

Oil prices - vulnerable to any weakening in global demand - were also under pressure, with the price of a barrel of Brent crude dipping below $70 (£54).

The fall in the FTSE 100 came as share traders in London had their first chance to react to Mr Trump's comments over the bank holiday weekend when the UK stock market was closed.

China-exposed stocks HSBC and Prudential - down by 2.7% and 3.7% - were among the biggest drags.

Industrial group Melrose - vulnerable to uncertainties in the global market - was down by nearly 6% while Burberry - for which China is a key market - fell nearly 4%.

On Wall Street, heavyweight industrial stocks such as Boeing and Caterpillar were also under pressure as well as tech companies Microsoft and Apple.

The United States has blamed an "erosion of commitments" by China for a threatened escalation in their trade war.

A deal to end the US-inspired conflict had thought to be close but for an announcement on Sunday by President Trump that tariffs on $200bn (£152bn) of Chinese goods were to go up from 10% to 25% from Friday.

His tweet to confirm the move accused Beijing of attempting to renegotiate elements of an agreement to end the 10-month stand-off.

He later tweeted: "The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we're not going to be doing that anymore!"

However, officials confirmed further top level talks would be taking place in Washington this week ahead of Friday's deadline for new tariffs.

US trade representative Robert Lighthizer accused Beijing of backtracking on the terms of the agreement.

"Over the course of the last week or so we have seen... an erosion in commitments by China.

"That in our view is unacceptable," he told reporters.

"We're not breaking off talks at this point. But for now... come Friday there will be tariffs in place."

Chinese vice premier Liu He is expected to be in Washington for the latest talks, due to resume on Thursday.

US treasury secretary Steven Mnuchin admitted they had hoped to sign a deal this week.

He said: "They were trying to go back on language that had been previously negotiated, very clear language, that had the potential of changing the deal dramatically.

"The entire economic team are completely unified and recommended to the president to move forward with tariffs if we are not able to conclude a deal by the end of the week."

China's foreign ministry responded: "We are also in the process of understanding the relevant situation.

"What I can tell you is that China's team is preparing to go to the United States for the discussions."

A spokesman later added on Tuesday: "Adding tariffs can't resolve any problem."

Neil Wilson, chief market analyst at Markets.com said: "There is a sense that the US is working extremely hard to extract last-minute concessions from China ahead of a planned visit by vice-premier Liu He.

"That visit has been confirmed - He is to visit the US May 9th-10th. Equity futures in Europe rose on the news of the Chinese visit still being a go, but risks remain skewed to the downside today it would seem."

The trade war to date has cost both countries billions of dollars and proved a drag on global economic growth.

It was started as President Trump sought to cut his country's trade deficit with China, which stood at a record $419.2bn (£319bn) in 2018 as the US imported almost $540bn (£412bn) in goods from China and exported $120.3bn (£92bn) in return.

China has already made a series of concessions including over the operation of US and other companies in China through the creation of a new law to protect their rights.

The US wants action, rather than words, to guarantee intellectual property and an end to forced technology transfers from US companies.