The FTSE 100 finished in the red on Wednesday, following US and European markets lower as a cocktail of jitters weighed on investor sentiment.
As well as the Dow Jones beginning the day in negative territory, the critical EU summit, Italy’s budget crisis, falling oil prices and Brexit all played their part in spooking traders.
The FTSE 100 closed the day down 4.8 points, or 0.07%, at 7,054.6.
Fiona Cincotta, senior market analyst at City Index, said: “After spending much of the session in the black thanks to the weaker pound, the FTSE joined its European counterparts in the red for the close.
“Tumbling oil prices and another volatile start to trading on Wall Street pulled the FTSE sharply lower.”
Among the fallers was Barratt Developments, which was impacted by a wider sell-off across the sector after a profit warning from rival Crest Nicholson spooked investors.
Crest blamed Brexit uncertainty for putting off buyers in the traditionally strong autumn selling season.
Barratt shares closed down 4p at 510p. This was despite Britain’s biggest housebuilder saying it had traded well in the first 15 weeks of its new financial year, with strong mortgage finance helping support demand.
At the other end of the index, Pearson shares were on a roll after the firm said it is on track for a return to profit growth this year as a turnaround plan begins to bear fruit.
The education publisher saw underlying revenues come in flat for the first nine months of the year, in line with market forecasts.
Pearson added that its underlying profit guidance remains unchanged within a range of £520 million to £560 million, with growth on an underlying basis pencilled in. Shares closed up 18p at 835.4p
Oil prices took a tumble as fears over demand and rising inventories spooked investors.
A barrel of Brent crude was trading more than 2% lower at 79.8 US dollars.
The pound also had a torrid time as a combination of Brexit and lower-than-expected inflation data conspired to see the British currency shed 0.3% versus the US dollar at 1.314.
Against the euro, sterling was down 0.1% at 1.138.
Figures from the Office for National Statistics showed the Consumer Prices Index (CPI) fell to 2.4% in September, compared with 2.7% in August.
This was the lowest level since June, when CPI was also 2.4%, and came as a surprise to economists who were expecting inflation to fall to 2.6%.
“The evening’s Brexit-focused summit in Brussels is likely going to dominate headlines – and trading – tomorrow morning, and has, alongside September’s inflation miss, kept the pound in a jittery mood,” said Connor Campbell, financial analyst at SpreadEx.
In Europe, Germany’s DAX was down 0.52% and France’s CAC 40 shed 0.54%.
The biggest risers on the FTSE 100 were British American Tobacco up 107.5p at 3,284p, Rentokil up 9.3p at 314.7p, Segro up 17.2p at 627p and Pearson up 18p at 835.4p.
The biggest fallers on the FTSE 100 were EasyJet down 60p at 1,150.5p, Compass down 55p at 1,517p, WPP down 34.5p at 1,028.5p and TUI down 44.5p at 1,338p.