* FTSE 100 down 0.8%, FTSE 250 down 0.7%
* Threat of tariffs on Mexico hits financials, miners
* Recession fears make safe haven assets desirable
* Housebuilders knocked after Nationwide data
* AIM-listed Stride Gaming up on Rank takeover offer (Adds news items, graphic, updates to closing prices)
By Shashwat Awasthi
May 31 (Reuters) - London's FTSE 100 fell almost 1% on Friday after U.S. President Donald Trump's threat of tariffs on Mexico and disappointing manufacturing data from China stoked global downturn fears.
The main index hit a more than two-and-a-half month low, while the mid-cap FTSE 250 fell 0.7%, with both recording their first monthly falls this year.
Data on Friday showed China's factory activity shrank more than expected in May, another of the economic ramifications of the Sino-U.S. trade dispute.
"The worry is who's next on Trump's list - the EU may be next," Markets.com analyst Neil Wilson said. "Coming at a time of a breakdown in talks with China, it's another blow to bulls and we should consider further downside risks from escalation."
Financial stocks fell more than 1% and miners were off almost 2%, while exporters such as British American Tobacco, Diageo and Unilever suffered as the dollar weakened.
"With Trump on the trade war path, it is tough to see how risks to markets aren't tilted even more to the downside," Cityindex analyst Ken Odeluga said.
But the macroeconomic uncertainty aided precious metals miner Fresnillo, which gained 2.8%. Utilities also advanced as investors sought out assets like gold and some defensive stocks.
Housebuilders fell after mortgage lender Nationwide said British house price growth had eased to its slowest in three months, pointing to the continuing impact of Brexit on consumer sentiment.
AIM-listed Stride Gaming surged 25% on its best day ever after it agreed to a takeover by Rank Group, which said the deal would create the number two player in UK online bingo, lifting its shares by 4.7%.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Patrick Graham, Alison Williams and Alexander Smith)