UPDATE 2-FTSE 100 ends lower on U.S.-China tensions

* FTSE 100 down 0.2%, FTSE 250 drops 1.2%

* Rolls Royce slumps on reports of job cuts

* Health care, energy stocks gain

* Largest UK firms expect 20% hit to sales in 2020 -survey
(Updates with market closing)

By Devik Jain and Sagarika Jaisinghani

May 4 (Reuters) - Britain's FTSE 100 closed lower on Monday,
as tensions between the United States and China over the origins
of the coronavirus outbreak outweighed support from drugmakers
and oil firms.

After falling nearly 1% at one point, the
internationally-focussed FTSE 100 ended down 0.2% as a
drop in the pound boosted some exporters. Midcap stocks
fell 1.2%.

UK shares still outperformed continental European
counterparts, which took a bigger hit on a return to trading
after the May 1 holiday.

After U.S. President Donald Trump revived tariff threats
against China last week, Secretary of State Mike Pompeo said on
Sunday there was "a significant amount of evidence" the virus
emerged from a laboratory in the central Chinese city of Wuhan.

An editorial in China's Global Times said he was "bluffing".

"Investors are concerned about what that is going to mean
for the U.S.-China relationship, the trade deals they've already
got in place, and what that means for the wider economy," said
Connor Campbell, financial analyst at SpreadEx in London.

Aero-engine maker Rolls Royce was among the biggest
decliners, falling 6.9% on news it is considering cutting up to
15% of its workforce as customers slash production and airlines
park planes due to a halt in global travel.

Travel and leisure stocks also fell, with shares in easyJet
, British Airways-owner IAG and Intercontinental
Hotels Group falling between 4.2% and 7.2%.

Broadcaster ITV declined 4.1% as it cancelled
popular dating show Love Island because of the pandemic and said
there would not be a new series until 2021.

A private survey showed Britain's largest companies expect
the pandemic to reduce their sales by more than a fifth this
year, a steeper slide than during the 2008-09 financial crisis.

Among other prominent fallers were banks, miners, insurers
and advertising firms.

The FTSE 100 hit near two-month highs last week as economic
stimulus measures and signs the pandemic was easing helped
investors overlook dire economic data that highlighted the
severe business damage already done.

However, fresh concerns on U.S.-China relations and the
impact of the reopening of economies from lockdown kept
investors guessing as to whether the recovery in equity markets
had further room.

Oil majors Royal Dutch Shell and BP
recovered from last week's slump, gaining 2.7% and 0.6%
respectively even as oil prices were mixed.

The wider pharmaceuticals and biotechnology index
gained 2.5%, with Hikma jumping 5.9%.

All eyes this week will be on the Bank of England policy
meeting on Thursday, although expectations are low for further
stimulus after the central bank cut rates twice in March and
ramped up its bond buying programme.
(Reporting by Sagarika Jaisinghani, Devik Jain and Sruthi
Shankar in Bengaluru; Editing by Anil D'Silva and Mark Potter)