Britain’s main stock market index closed at an all-time high on Thursday as investors seeking refuge from America’s market slump turned towards the UK.

The FTSE 100 index of London’s largest companies ended 0.2pc higher on Thursday at 8,834.92 points amid a backlash against Donald Trump’s economic policies, which investors fear will hinder American companies’ profits.

The flagship British index, which had performed poorly in recent years compared with the US, is up by 8.7pc since the start of the year, beating America’s S&P 500’s which has risen by 2.7pc.

Neil Wilson, of Saxo Bank, said: “We have clearly seen a rotation in global equity markets as investors have for the first time in years questioned the ‘Tinata’ – there is no alternative to America.”

He said clients were talking about “reducing exposure to the US”.

The FTSE 100’s record high came as the value of the dollar plunged to a three-year low after President Trump sparked fresh fears about global trade.

The US currency sank on Thursday to its lowest level since March 2022 against a group of major peers, leaving it down by nearly 10pc so far this year.

Investors have turned away from the dollar after the US president said he would send out letters to countries outlining the terms of trade deals.

That sent the pound to a three-year high above $1.36 and pushed the euro to close at $1.16, its highest level since 2021, as the president’s comments renewed concerns that US tariffs could hit global growth.

In a further sign of his mixed signals on trade, President Trump sought to calm nerves by talking up the prospects of a US-China trade agreement, following two days of talks between Washington and Beijing officials in London this week.

He wrote on his Truth Social platform: “THE CHINA DEAL IS GREAT!”

He later told reporters: “I love China. We just made a deal, and I respect President Xi a lot, and we made a deal that’s good for both countries. The deal we made with China good for both countries. Going to be a lot of money made, and it’s going to ultimately open up China, which is the ultimate thing.”

Charu Chanana, of Saxo Bank, said: “Markets may have no choice but to respond to Trump’s tariff threat – even if it’s just posturing to bring others to the table.”

The dollar was also hit by a flurry of data, which suggested the global economy was beginning to show signs of strain.

Britain’s goods exports to the US plunged at a record pace after President Trump launched his tariff onslaught in April, official figures showed.

UK exports to the United States fell by £2bn compared with the previous month, according to the Office for National Statistics, which was the largest drop since official records began in 1997.