LONDON, May 23 ― Shaky investor sentiment after China warned of difficult times ahead due to its trade dispute with the United States led Britain's FTSE 100 into the red, while mounting Brexit worries sank the pound and hit the mid-cap index.

The FTSE 100 was down 0.7 per cent and the FTSE 250 lost 1 per cent by 0725 GMT.

Financials and mining shares were among the biggest drags on the main index as the unresolved trade tensions took their toll, while oil majors also weighed.

A study by Barclays showed that more Britons would opt for "staycations” this year over heading for trips abroad, potentially hurting tour operators.

As a result, shares of TUI and easyJet shed more than 2.5 per cent to be among the biggest blue-chip fallers.

The FTSE 250 struggled as the local currency was depressed after Prime Minister Theresa May's new Brexit gambit backfired, fuelling further calls for her to quit.

Still, mid-cap pub operator Mitchells and Butlers jumped nearly 8 per cent on course for its best day in almost two years, after robust half-year results.

Serco also added 7.7 per cent after saying it would buy US Navy supplier Alion's Naval Systems Business Unit. ― Reuters