The London markets lurched into the red as early positive sentiment was wiped out by a raft of downbeat economic data, including disappointing UK retail figures.
London stocks slipped after the CBI’s latest monthly survey showed that retailers have slashed jobs at the fastest pace since the height of the financial crisis.
The FTSE 100 closed 67.72 points lower at 6,037.01 at the end of trading on Tuesday.
Connor Campbell, financial analyst at Spreadex, said: “Benefiting early on from positive correspondence between the US and China, then Western markets lost their way as Tuesday progressed, with some duff data serving to undermine sentiment.
“Potentially just a blip after yesterday’s Covid-19 treatment excitement, the Dow appeared to take a hit following the release of the latest US consumer confidence reading.
“The FTSE found itself in a similar situation as retail employment falls at the faster rate for over a decade, the CBI sales balance reading for August sank to minus 6% – a huge drop from both July’s 4%, and the forecast 7%.”
Mr Campbell said the top UK index was also pressurised by an unlikely uplift in sterling.
It pushed higher against the dollar and euro as investors temporarily parked concerns over a no-deal Brexit.
The pound rose 0.59% versus the US dollar at 1.314 and was up 0.32% against the euro at 1.111.
Markets across Europe retreated later in the session as economic concerns pressed on sentiment but finished broadly flat as a result of early gains.
The German Dax decreased by 0.04%, while the French Cac moved 0.01% higher.
Across the Atlantic, the Dow Jones fell from its six-month high recorded on Monday, despite the potential thawing in the US-China trading relationship.
Mining stocks and oil firms dropped lower as they felt the impact of a sustained dip in energy prices.
In company news, Upper Crust owner SSP Group saw shares slip despite overhauling pay plans for top bosses after investor anger over bonus targets and a pay hike for its finance chief.
The group said it had made a raft of improvements to executive pay after talks with investors following a shareholder backlash in February. Shares closed 6.6p lower at 229.6p.
Sofa retailer DFS lifted after reporting a strong start to its financial year as customers in the UK are prioritising investment in the homes they were confined to for months.
It closed 16p higher at 166p after it said it has received orders for £70 million more in the past six weeks than during the same period last year.
Elsewhere, marine service firm James Fisher & Sons saw shares slide by 114p to 1,116p after trading deteriorated in the first half of the year due to lower energy prices and coronavirus disruption.
The price of oil continued to make strong gains on the back of the rough weather in the Gulf of Mexico, which weighed on supply again.
The price of a barrel of Brent crude oil increased by 2.34% to 45.96 US dollars.
The biggest risers on the FTSE 100 were Aveva Group, up 314p at 4,646p, GVC, up 29.4p at 800.6p, Intercontinental Hotels Group, up 145p at 4,448p, and IAG, up 4.9p at 202.2p.
The biggest fallers of the day were CRH, down 104p at 2,933p, ITV, down 2.08p at 60.64p, Anglo American, down 62.2p at 1,844.2p, and Informa, down 13.5p at 402.8p.