The FTSE 100 closed at its lowest level since the turn of the year on Tuesday as market caution continued.
Weakness among oil and commodity stocks weighed on the top index during the session, offsetting notable gains from housebuilders.
Housebuilding shares were boosted by a positive update from Persimmon and greater stability over borrowing costs on Tuesday.
The FTSE 100 finished 22.65 points, or 0.28%, lower to end the day at 8,201.54. It marked the lowest closing reading since December 31.
It came as the pound also weakened ahead of key December inflation data from the Office for National Statistics on Wednesday, with the currency sliding to its weakest level against the Euro since last September.
The pound was down 0.52% at 1.217 US dollars and down 0.61% at 1.183 euros when London’s markets closed.
Elsewhere in Europe, the other major markets staged a slight recovery over the session, amid hopes that President Donald Trump could adopt a more cautious tariff policy than previously expected.
The Cac 40 ended 0.2% higher for the day and the Dax index was up 0.69%.
In the US, Wall Street stocks had a positive start to trading after producer price inflation came in softer-than-expected for last month, indicating more interest rate cuts could be on the horizon.
In company news, Persimmon was among the top climbers on the FTSE 100 after the housebuilder said annual profits will be at the top end of forecasts.
The positive outlook came as it also said private market house prices had improved over the year, edging up to around £287,150 from £285,774 a year earlier.
Shares in Persimmon finished up 5.49% at 1,114p.
Ocado jumped in value after its online retail arm cheered strong sales, driven by customers shopping more frequently with the firm.
The company, which is run as a joint venture with Marks & Spencer, said it made £2.7 billion in revenues for the year to December 1, nearly 14% higher than the previous year.
Shares in Ocado Group rose by 9.52% to 295.7p as a result.
Fellow retailer JD Sports dropped in value after the high-street chain lowered its profit outlook for the year due to a challenging fashion market.
Shares in the company were 6.36% lower at 90.18p after it said like-for-like revenues over November and December were 1.5% lower than the same period a year ago.
Elsewhere, BP was a significant faller after the energy giant signalled weaker end-of-year trading.
The company also delayed an investor event due to be held in New York to allow boss Murray Auchincloss to recover after a medical procedure.
Shares dipped by 2.54% to 420.25p, as it was also impacted by a slump in oil prices.
The price of oil pulled back slightly after the recent bull run amid broader weakness in energy trading.
A barrel of Brent crude oil was down by 1.20% to 80.04 dollars (£65.76) as markets were closing in London.
The biggest risers on the FTSE 100 were Persimmon, up 58p to 1,114p, Airtel Africa, up 4.1p to 120.2p, Ashtead, up 158p to 5,024p, St James’s Place, up 21p to 829p, and Pershing Square, up 96p to 4,146p.
The biggest fallers on the FTSE 100 were JD Sports, down 6.12p at 90.18p, Games Workshop, down 790p at 12,440p, Next, down 322p at 9,028p, Intermediate Capital Group, down 62p at 2,010p, and GSK, down 37.5p at 1,293.5p.