The FTSE 100’s recent rally stalled on Tuesday as early gains were wiped out by international pessimism.
The index started the day brightly, lifting to its latest record high as it benefited from strong earnings updates from the likes of Whitbread and HSBC.
It spent most of the day with firm gains but slumped towards the end of trading as weaker sentiment in the US acted as a drag.
London’s top index finished 2.9 points, or 0.04%, lower to end the day at 8,144.13.
In the US, the main indexes opened lower as they retreated from Monday’s gains and digested deteriorating consumer confidence data for the third consecutive month.
Elsewhere in Europe, trading was weaker throughout the session as a slowdown in factory activity in China also impacted sentiment.
The German Dax index was down 1.08% at the close and the Cac 40 in France ended down 0.99%.
Meanwhile, sterling dropped against the dollar as many US investors looked hopefully towards the May Federal Reserve meeting.
The pound was down 0.41% at 1.250 US dollars and was 0.03% lower at 1.170 euros at market close in London.
In company news, Whitbread shares jumped after the hospitality giant announced a major shake-up which will axe around 1,500 jobs across the UK.
The group, which owns restaurants including Brewers Fayre and Beefeater, has said it plans to slash its chain of branded restaurants by more than 200 in favour of building more hotel rooms.
Investors welcomed the news, with shares lifting 120p to 3,167p.
HSBC shares were also higher despite chief executive Noel Quinn announcing his plans to retire from the bank after five years.
Positive sentiment was driven by the group’s higher-than-expected profits as net interest income dipped by 3% for the latest quarter.
HSBC shares rose by 27.5p to 695.6p.
Greeting cards manufacturer IG Design Group was sharply higher after said profits jumped beyond expectations.
It closed up 36p to 157.5p after it said it expects to report adjusted pre-tax profit of 25.9 million US dollars (£20.7 million) for the year to March.
AIM-listed firm Deltic Energy plunged after it revealed its struggles to find a partner for its Pensacola discovery in the North Sea, warning shareholders that it may not be able to participate in its licence for the site as a result.
The warning, which it linked to the UK’s energy profit levy, knocked shareholders, and saw its stock drop by 18.1p to 20.4p.
The price of oil continued its recent dip as talks in Cairo over a possible Israel ceasefire tempered fears of a wider Middle East conflict.
A barrel of Brent crude oil was down by 0.9% to 82.8 US dollars as markets were closing in London.
The biggest risers on the FTSE 100 were HSBC, up 27.5p to 695.6p, Whitbread, up 120p to 3,167p, Intermediate Capital, up 68p to 2,100p, Haleon, up 8.2p to 339.5p, and Tesco, up 4.3p to 296.3p.
The biggest fallers on the FTSE 100 were Fresnillo, down 32.5p to 558p, Prudential, down 40.4p to 701p, Anglo American, down 116p to 2,634p, Entain, down 31.6p to 786.6p, and Vodafone, down 2.34p to 67.66p.