London’s top stocks dropped further on Tuesday as weaker oil prices and downbeat trading on Wall Street hit equities.
A slump in commodity prices dragged mining and oil firms to the bottom of the FTSE, offsetting an improvement in Rolls-Royce’s share price.
The FTSE 100 finished 65.38 points, or 0.78%, lower to end the day at 8,298.46.
Across the Channel, the German Dax started the session by lifting to a new record high but quickly dropped lower as trading confidence waned.
The Cac 40 in France ended 0.93% lower for the day and the Dax index was down 0.92% at the close.
In the US, stocks dropped firmly on the opening bell as weaker-than-expected ISM manufacturing figures added to concerns over economic growth.
Axel Rudolph, senior technical analyst at IG, said: “Historically, the US stock market tends to end in negative territory in September; the return of US traders after Labour Day and a drop in US indices thus doesn’t come as a surprise.
“The US ISM manufacturing data shows the 21st monthly contraction in US factory activity in the last 22 periods, underscoring the impact of high interest rates.”
Meanwhile, sterling stepped back again as currency traders continued to sell off following last week’s year-high versus the dollar.
The pound was down 0.31% at 1.310 US dollars, and was down 0.03% at 1.186 euro.
In company news, Rolls-Royce recovered some ground from its Monday losses, as the engineering giant stressed that it was “working closely” with international airline Cathay Pacific after confirming that one of its engine parts failed, leading to flight cancellations.
The company saw shares slump heavily in the previous session as investors digested the issue.
On Tuesday, Rolls-Royce said its engineering team “thoroughly inspected” its fleet of operational A350 aircraft within a day, and found 15 planes that need engine components replacing, with three already going through successful repairs.
Shares in the business finished up 1.7% to 472.3p for the session as a result.
Watches of Switzerland gained during the session after the retailer said it is confident of boosting sales and profitability over the full year amid a recovery in the luxury market.
The UK’s biggest seller of Rolex and Omega watches said trading in the first 18 weeks of its new financial year was in line with expectations.
It saw shares lift by 6.3% to 400.2p as a result.
Wizz Air shares slipped despite reporting a record 6.2 million passengers in August.
Shares were down 2.9% as it reported its latest passenger figures, which had been impacted by the Pratt & Whitney GTF engine-related groundings.
The price of oil swung closer to a new six-month low as concerns over demand weighed on energy trading.
A barrel of Brent crude oil was down by 3.6% to 73.49 US dollars (£58.15) as markets were closing in London.
The biggest risers on the FTSE 100 were easyJet, up 13p to 488p, B&M European, up 9.6p to 447.1p, Rolls-Royce, up 8p to 472.3p, Tesco, up 5.6p to 361.7p, and Reckitt, up 63p to 4,443p.
The biggest fallers on the FTSE 100 were Rightmove, down 48p to 660p, Fresnillo, down 30.5p to 511.5p, Anglo American, down 106.5p to 2,108.5p, Antofagasta, down 85.5p to 1,757p, and Melrose Industries, down 21.1p to 464.7p.