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UPDATE 2-Trade view dims, Kingfisher drops on FTSE's worst day in 3 weeks

* FTSE 100 down 0.8%, FTSE 250 down 0.3%

* U.S.-China tensions hit HSBC, oil, miners

* Kingfisher drops after Q3 report

* Mitchells & Butlers outshines mid-caps

* Graphic https://fingfx.thomsonreuters.com/gfx/mkt/12/8896/8808/graphics.png: Sterling, FTSE 250 vs odds of Tory majority in Dec. election (Adds news items, graphic, updates to closing prices)

By Shashwat Awasthi and Yadarisa Shabong

Nov 20 (Reuters) - UK stocks fell on Wednesday after three sessions of gains as flaring tensions between China and the United States cast doubt over prospects of a trade deal and retailer Kingfisher slumped 7% following disappointing quarterly sales.

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The FTSE 100 lost 0.8% on its worst day in almost three weeks, as trade concerns weighed on Asia-exposed financial stocks like HSBC, while oil majors Shell and BP and industrial stocks also slipped.

Losses on the more domestically-focussed FTSE 250 were slightly more contained, as the index gave up 0.3%.

However, earnings-driven gains helped pub operator Mitchells & Butlers, software company Micro Focus and thermal processing service provider Bodycote rise between 4%-5% and outperform the mid-cap index.

Worries over U.S.-China trade escalated as President Donald Trump threatened to raise tariffs on imports if no deal was reached, while nerves were jangled further after the U.S. Senate passed legislation backing protesters in Hong Kong, which drew condemnation from Beijing.

That spurred a broad sell-off across global markets as investors chose to prioritise safer bets over risky assets like stocks. They will also keep an eye on the U.S. Federal Reserve's latest minutes, though no surprises are expected.

"Given that the U.S. Senate has just passed legislation in support of the Hong Kong protests, such a move threatens to drive a wedge into ongoing negotiations while potentially raising the barrier to a trade deal," FXTM analyst Han Tan said.

Shares in Aviva Plc fell 3.5% as investors were underwhelmed by a strategy update from the insurer, which analysts say is struggling for direction since replacing its top boss.

Domestic stocks, which have benefited from polls indicating a likely Conservative victory in the upcoming election, weakened after three sessions, but still outperformed the broader European benchmark.

Markets are viewing a prospective Tory victory as a positive on hopes that Prime Minister Boris Johnson, with a majority in parliament, will be able to reduce uncertainty by delivering Brexit by the Jan. 31 deadline.

With less than a month to go before the ballot, Johnson on Tuesday doubled down on his Brexit promise in a debate with his main rival, Labour Party leader Jeremy Corbyn.

Other news-driven moves saw AIM-listed Fevertree, which slid in early trading, recoup to rise 8% as the market seemingly shrugged off the tonic water maker's revenue warning to focus on sales growth in the U.S. (Reporting by Yadarisa Shabong and Shashwat Awasthi in Bengaluru; Editing by Uttaresh.V, Shounak Dasgupta and Giles Elgood)