Shares in London’s biggest companies were dragged lower on Wednesday after banks slashed their dividends and the US warned hundreds of thousands of Americans might die in the pandemic.

The FTSE 100 opened down, dropping as much as 4.5%, before settling closer to 4%, at 5445.95 points.

It broke a two-day winning streak for the index, which has managed to regain some ground since dropping below 5,000 points last month.

Neil Wilson, chief market analyst at Markets.com, said: “A bit of a gloomy start to April, like a sharp frost killing off the buds that appeared too soon.”

The news comes as the number of Americans with coronavirus who have died reached more than 4,000, with more than 40,000 thought to have died globally.

US President Donald Trump said on Tuesday that between 100,000 and 240,000 Americans could die from the pandemic which is gripping communities worldwide.

American markets closed down as a result, ending a dreadful quarter when the Dow Jones lost around a quarter of its value.

It had a knock-on effect on European markets on Wednesday.

Mr Wilson added: “Global stocks got off to a soggy start in April as economic damage wrought by the coronavirus was laid bare and investors felt there was not yet enough to show the virus was at or near its peak in Europe or the US.

“Donald Trump reflected the mood as he warned of weeks of pain still ahead, a stark change from his rather casual approach thus far. He also called for another two trillion dollars for infrastructure spending.”

Banks led the FTSE’s drop on Wednesday after announcing they would not return money to shareholders this year, and cancelling outstanding dividends from 2019.

HSBC was down by 9.3%, Standard Chartered by 7.1%, Lloyds by 5.2%, the Royal Bank of Scotland by 5%, and Barclays by 4.8%.