The FTSE 100 slumped to a three-month low after it was dragged down by the pound’s recent rally.
Multinational and financial firms took a hit as a result, while continental equity markets remained more mixed.
London’s top flight closed 101.52 points lower at 5,862.05 at the end of trading on Tuesday.
David Madden, market analyst at CMC Markets UK, said: “The FTSE 100 is to finish deep in the red as a mixture of a firmer pound and a poor performance from banking and energy stocks has hurt the index.
“Diageo, GlaxoSmithKline, AstraZeneca, Ashtead and Unilever all derive a large portion of their revenue from overseas, so the push higher in the pound usually hits the stocks.
“The declines in Royal Dutch Shell, BP, HSBC and Lloyds were weighing on the British benchmark too.”
Sterling continued its recent purple patch to hit its highest mark against the dollar since December, as a result of strong UK manufacturing figures and weakness in the US greenback.
The pound rose 0.54% versus the US dollar at 1.341 and was up 0.15% against the euro at 1.123.
Europe’s other major markets were far more muted, with the German Dax reporting a small gain after the German government said it now predicts the economy will shrink by 5.8% in 2020, decreasing its previous forecast of 6.3%.
The German Dax increased by 0.22%, while the French Cac moved 0.18% lower.
Across the Atlantic, the Dow Jones and S&P both moved a little higher after the US posted its own encouraging manufacturing data.
Mining and commodity firms dominated the risers on Tuesday after well-received manufacturing data from China helped to lift metal prices.
In company news, Marks & Spencer shares dipped on its first day of grocery deliveries after linking up with Ocado, as it was marred by technical issues.
Shares in M&S fell by 4.75p to 106.35p after the companies confirmed that “a very small number of orders” were cancelled following a jump in demand.
Shares in road recovery firm AA slipped after it requested more time to continue talks with takeover suitors as it approached a regulatory deadline.
It closed 2p lower at 32.7p after reports that two bidders could also join forces, tempering hopes from investors that there could be a bidding war for the business.
Cake Box lifted higher after the cream cake business reported strong momentum for its post-lockdown sales.
It closed 5p higher at 179p after recording comparable sales growth of 14.1% across its stores for the three months to August 30.
Dunelm shares rose by 62p to a fresh record of 1,491p after it revealed a surge in homeware sales in a short but sweet trading update.
The price of oil dipped marginally despite sentiment being lifted earlier in the session by positive international manufacturing statistics.
The price of a barrel of Brent crude oil decreased by 0.22% to 45.84 US dollars.
The biggest risers on the FTSE 100 were Fresnillo, up 57.5p at 1,320p, BHP, up 38.8p at 1,751.6p, Glencore, up 3.66p at 172.84p, and Anglo American, up 24p at 1,856.6p.
The biggest fallers of the day were Rolls-Royce, down 34.4p at 206.7p, IAG, down 13.8p at 202.5p, Melrose, down 6.32p at 95.48p, and ITV, down 3.66p at 57.06p.