London’s top flight ended in negative territory on Tuesday as disappointing results from HSBC helped drag the index into the red.
The FTSE 100 closed down 40.3 points, or 0.56%, at 7,179.17.
David Madden, market analyst at CMC, also pointed to lingering trade tensions that are weighing on equity markets.
“The FTSE 100 is in the red this afternoon as a lack of positive news has encouraged some traders to take money off the table.
“The disappointing results from big hitters HSBC and BHP Billiton have weighed on the British equity benchmark.
“There are some concerns that President Trump could trigger a trade war with the EU in relation to the importation of vehicles and auto parts, so some investors are cautious.”
— David Madden (@dmadden_CMC) February 19, 2019
HSBC propped up the blue-chip index, closing down 26.6p, or 4%, at 637.1p.
It came after profits at the banking titan missed expectations as a “challenging” fourth quarter was hobbled by uncertainty surrounding the US-China trade dispute and Brexit.
HSBC’s pre-tax profits rose 16% to 19.9 billion US dollars (£15.4 billion) for 2018 compared with the previous year but fell short of analysts’ estimates of 21.3 billion dollars (£16.5 billion).
Reported revenue increased 5% to 53.8 billion dollars (£41.6 billion).
On the FTSE 250, shares in Greggs were on a tear, closing up 179p, or 11.1%, at 1,781p.
The high street chain lifted its 2019 profit outlook after the launch of a controversial vegan sausage roll helped drive a surge in customers.
Greggs said trading had been boosted by “extensive publicity” surrounding the launch of the new product at the start of January.
The group posted a 9.6% rise in like-for-like sales for the seven weeks to February 16, while total sales lifted 14.1%.
This compares with a 2.9% hike in like-for-like sales a year earlier, when trading was hit by extreme weather.
In currencies, the pound was trading up 1% versus the US dollar at 1.304 at the London market close. Against the euro, sterling was up 0.7% at 1.150.
The bounce was linked to strong economic data as official figures showed that record numbers of people are in work and job vacancies are at their highest level ever.
In addition, average earnings increased by 3.4% in the year to December, the highest for a decade, outpacing inflation.
The UK’s jobless rate is now 4%, down by 0.3% on a year ago, and the lowest since 1975.
Mild optimism surrounding Brexit was also causing a stir among currency traders.
Evening Market Comment: Brewing Brexit optimism, however premature, gets sterling salivating… https://t.co/nf46sIRowp
— Connor Campbell (@ConnorSpreadex) February 19, 2019
Connor Campbell, financial analyst at SpreadEx, said: “Brewing Brexit optimism got sterling salivating on Tuesday, a move that pushed the FTSE from its recent four-month highs.
“With a decent foundation based on the day’s slightly disappointing but still strong UK jobs report, confirmation that Theresa May will return to Brussels on Wednesday for a no-frills meeting with Jean-Claude Juncker appeared to give the pound the edge as trading went on.”
In Europe, German’s Dax closed up 0.04% while France’s Cac 40 fell 0.3%.
A barrel of Brent crude was trading at 65 US dollars, a fall of 0.8%.
The biggest risers on the FTSE 100 were Micro Focus up 63.5p at 1,812p, Tui up 26.8p at 852.8p, Coca Cola HBC up 69p at 2,633p, and Carnival up 85p at 4,373p.
The biggest fallers were HSBC down 26.6p at 637.1p, Rentokil down 9.8p at 344.1p, BAE Systems down 13.2p at 511.6p, and GVC down 15p at 615p.