* FTSE 100 down 0.8%, FTSE 250 down 0.5%
* Blue-chips suffer third day of losses
* Oil companies among few gainers
* Ted Baker falls to lowest in more than a decade
* Ocado slips after bond issue (Adds company news items, updates to closing prices)
By Shashwat Awasthi and Muvija M
Dec 2 (Reuters) - UK shares handed back gains to close lower on Monday as a combination of U.S. President Donald Trump setting off global trade worries and disappointing data from the world's biggest economy doused the morning's cheer.
The FTSE 100 ended down 0.8% on its third session in the red, after rising by the same level earlier in the day, while the mid-cap FTSE 250 dipped 0.5%.
Still, UK stocks managed to outperform their European peers owing to gains in oil companies on hints that OPEC and its allies may agree to deepen output cuts at a meeting this week.
Trump's surprise plans to restore tariffs on U.S. steel and aluminium imports from Brazil and Argentina dragged most other stocks in to the red.
While estimate-beating factory data from China helped kick off trading on a positive note as investors entered the final month of the year, questions about the health of the world economy were quick to return after U.S. figures missed expectations.
All but two sectors recorded falls on the main board, with losses led by a 7.4% fall in online grocer and technology company Ocado after launching a convertible bond issue.
Burberry, which like other luxury retailers counts Asia among its biggest markets, declined by 5% after data showed Hong Kong's retail sales in October fell by their steepest on record as anti-government protests spooked tourists and hit spending.
Other news-driven moves saw small-cap Ted Baker fall 8% to its lowest level in more than a decade after the retailer said it may have overstated inventory by as much as 25 million pounds.
Hopes of a trade deal between Beijing and Washington were kept in check after news website Axios reported over the weekend that the deal was now "stalled because of Hong Kong legislation".
China's Global Times newspaper also reported last night that Beijing's top priority in a preliminary deal was the removal of existing tariffs.
"It is hard to see the U.S. swallowing a very bitter trade pill like that ... It is now becoming more apparent why the talks have dragged on so long," OANDA analyst Jeffrey Halley said.
That left markets with little to look forward to as a torrid year, underlined by the U.S.-China trade war and Brexit uncertainties, draws to a close.
Among few gainers on the mid-cap index was Tullow Oil , which climbed 4% on reports that the company had agreed to sell stake in its Ugandan oil fields.
($1 = 0.7794 pounds) (Reporting by Shashwat Awasthi in Bengaluru; Editing by Sherry Jacob-Phillips and Giles Elgood)