A better-than-expected start to the US bank reporting season failed to lift investor spirits as fears over the global economy weighed on sentiment.
The FTSE 100 Index closed 13.3 points lower at 6104 as the Dow Jones Industrial Average also slipped into the red in early trading after the World Bank slashed growth forecasts.
It now expects the global economy to expand by just 2.4% this year, down from its June projection for global growth of 3% in 2013.
The World Bank also said that America’s budget battles are restraining economic growth globally and the prospect of another stand-off over the country’s debt ceiling pose a greater risk than even a renewed eurozone crisis.
In currency news, the pound fell after yesterday’s Fitch rating agency warning about the UK’s credit rating and amid growing uncertainty over the possibility of a referendum on Britain’s EU membership.
Sterling fell to $1.60 and 1.20 euros.
The biggest FTSE 100 risers were TUI Travel up 11.1p to 292.5p, Tate & Lyle ahead 19.5p to 788.5p, Carnival 60p higher at 2520p and Shire up 49p at 2082p.
The biggest FTSE 100 fallers were Imperial Tobacco down 116p to 2368p, Xstrata off 40.5p to 1142.5p, Glencore International 12.5p lower at 380.25p and Anglo American down 60p to 1901p.