* FTSE 100 down 2.5%, FTSE 250 down 2%
* Equities sell-off continues for second straight session
* M&S, Ocado down after online food JV
* Fresnillo gains as gold surges
* easyHotel climbs after buyout offer (Adds analyst comment, updates to closing prices)
By Shashwat Awasthi
Aug 5 (Reuters) - Britain's stock market indexes fell sharply on Monday, joining a sell-off in global markets, as U.S.-China trade tensions prompted investors to seek safe-haven assets, while Ocado and Marks & Spencer fell after sealing a deal to set up an online food joint venture.
The FTSE 100 shed 2.5% in its worst day since early December, while the mid-cap FTSE 250 sank 2% and hit its lowest level in two months.
Markets have been alarmed by President Donald Trump's action to slap 10% tariffs on $300 billion in Chinese imports, prompting China to vow to retaliate.
"There is a feeling that China could inflict a lot more pain on the U.S. in terms of the trade spat, and many traders are worried the economic conflict will rumble on for some time," CMC Markets analyst David Madden said.
The FTSE 100 in May posted its only monthly loss so far this year as the trade dispute escalated, before Washington and Beijing called for a truce. That, along with a slump in the pound over no-deal Brexit fears, has since helped the index post back-to-back monthly gains.
"Judging by the ferocity of the last two day's sell-off and today's further declines ... we look set to see some further August angst for investors," CMC Markets analyst Michael Hewson said.
With dealers shunning equities, gold prices jumped to their highest level in more than six years on Monday. Precious metals miner Fresnillo added 4.7% and was the only blue-chip stock that closed in the black.
Retailer Marks & Spencer and online supermarket Ocado fell 5.1% and 4.6% respectively, following their online food venture deal that will result in the termination of Ocado's current deal with Waitrose.
Taylor Wimpey dropped 5.2% after multiple brokerages cut their price target on the stock after the housebuilder's downbeat results and margin warning last week.
AIM-listed budget hotel chain easyHotel soared 33.3% to 94 pence after its board recommended a bid of 95 pence per share from a consortium of property funds.
Thomas Cook, whose shares soared almost 90% last week after the founder and owner of Turkish tour operator Anex Tourism Group built a stake in the company, surged another 35% as it advanced for the fourth session in a row.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Anil D'Silva and Jane Merriman)