The FTSE 100 has suffered its sharpest drop in nine months as fears about delays to US rate cuts added to worries about conflict between Israel and Iran. The UK’s flagship stock index dropped as much as 2.1pc - its steepest decline since March last year - as more strong economic data in the US added to expectations that interest rate cuts will be delayed. It closed down 1.8pc or 147 points - the biggest decline since July last year. European markets were already mired in red as stocks plunged amid a global sell-off of equities after top Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles. On Wall Street, stocks were muted after suffering steep declines on Monday, with its so-called “Fear Gauge” — the Chicago Board Options Exchange Volatility Index — shooting up by more than a quarter over Friday and Monday to the highest since late October, several weeks after the initial Hamas attack on Israel. Markets took a further hit this afternoon as factory output in the United States increased in March at a rate in line with expectations, as manufacturing and mining logged gains,...