Escalating trade aggression sends FTSE 100 spiraling

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* FTSE 100 down 1 pct

* Indivior (Frankfurt: 2IVA.F - news) tumbles 5 pct after patent litigation loss

* Smiths Group (Frankfurt: QS2A.F - news) down 11 pct

* GSK pulls out of Pfizer (NYSE: PFE - news) consumer health bid

* Asia-exposed funds tumble

By Helen Reid

LONDON, March 23 (Reuters) - Mounting fears of a global trade war after the U.S. slapped tariffs on imports from China sent British stocks to a fresh 15-month low on Friday, erasing all the gains the UK's leading stock index made in 2017.

The FTSE 100 was down 1 percent by 0930 GMT, hitting its lowest level since December 2016 in early trading.

Investors warily eyed the response from China, which urged the United States to "pull back from the brink", and unveiled its own plans to impose tariffs on up to $3 billion of U.S. imports.

Bank stocks and miners were the biggest drags on the British market as risk sentiment soured and the most trade-sensitive sectors suffered.

Some felt this was a long-overdue sell-off in stock markets which enjoyed an unusually robust 2017 but have run into obstacles since the start of last month.

"It could have been anything that caused it, it just happened to be trade," said Daniel Lockyer, senior fund manager at Hawksmoor Investment Management.

"The market is a discounting mechanism and we didn't think it was discounting enough risks out there, whether it's corporate earnings disappointing, political risks, the end of QE," he added.

Indivior shares plummeted more than 20 percent at the open before recovering, last trading down 6.5 percent, after the pharma firm lost a patent protection case, setting it up for cheap competition to its opioid addiction treatment.

A U.S. court ruled generic drugs firm Alvogen had not infringed three of the British firm's patents, a blow to Indivior whose Suboxone Film treatment accounts for as much as 80 percent of its revenue.

"Whilst this is disappointing news, given there remain multiple hurdles before a generic Suboxone film can launch in the US, we still see the launch of a generic in 2018 as unlikely.

GSK rose 3 percent after it pulled out of the bidding war for Pfizer's consumer health business (PFE.N,) following in the footsteps of Reckitt Benckiser (Xetra: A0M1W6 - news) earlier this week.

Smiths Group sank 10.2 percent to the bottom of the FTSE 100 after reporting a weaker first-half profit than expected. Both profit and revenue fell short of analysts' expectations, with the engineering group pointing to currency headwinds and higher R&D costs.

"Delivering the now expected 8 percent organic growth and 70 basis points year-on-year margin improvement in the second-half is key to the investment case going forward, in our view," analysts at Credit Suisse (IOB: 0QP5.IL - news) said.

Double-digit falls in share prices after results have become a common feature of the UK stock market in the past months. "There's little margin for error," said Hawksmoor's Lockyer.

Meanwhile Next jumped 4.6 percent to the top of the FTSE after its annual results, with investors relieved the clothing retailer did not issue a profit warning.

A broadly challenging retail environment has caused many of Britain's high street stores to suffer sharp losses, making Next (EUREX: NXTJ.EX - news) a relative winner.

UK-listed funds invested in Japan and China were among the worst performers on the mid- and small-cap indexes after a rout in Asian trading overnight.

Baillie Gifford Japan Trust fell 3.5 percent, while Fidelity China Special Situations tumbled 2.9 percent. Among small-caps Fidelity Japanese Value shares dropped 4 percent and Schroder Japan Growth Fund lost 3.8 percent.

(Reporting by Helen Reid Editing by Andrew Heavens)