The FTSE 100 continued to give back some of its big gains from Monday as the index was hit by a midweek drop sweeping the globe.
A change in the outlook for government bond yields in the US helped worry traders on Wednesday, said David Madden, an analyst at CMC Markets.
It meant that London’s top index closed down 37.96 points, ending the day at 6,710.9, a reduction of 0.6%.
The downward move came in part from global market sentiment, but also from company news closer to home. Among the biggest losers on the day were Hargreaves Lansdown and British American Tobacco.
Hargreaves fell after its co-founder, Peter Hargreaves, sold off shares for £300 million, reducing his holding to around 19%, while BAT dropped after its guidance for the year was below its long-term target.
Unusually, a fall in the value of the pound did not seem to help the FTSE 100 avoid drops that were seen elsewhere around the world.
When sterling loses value – which it did by 0.5%, buying $1.3833 by the end of trading in London – it normally helps the FTSE, which is full of exporting companies which often operate in the US currency.
But the FTSE 100’s performance showed few signs of this, falling further than the Dow Jones in the US, down 0.2%, and the Cac in France, down 0.4%.
The index did outperform some major international peers, such as Germany’s Dax, down 1.1%, and the New York-based S&P 500, which was trading down 0.7% by the close of play in Europe.
The Dow’s drop came after it started the day up five points, which put it at an all-time high.
Sterling’s drop was largely down to a strong dollar, rather than a weak pound, and the UK currency gained 0.2% against the euro, buying 1.1503.
The dollar had been helped by January US retail sales, released on Wednesday, which smashed through the 1.1% growth that had been expected, hitting 5.3%.
“It’s interesting that the pound’s drop against the dollar didn’t help the FTSE reverse its fortunes. Instead the index was lumbered with a 0.3% decline, struggling with losses for Barclays, Lloyds and HSBC, and chunkier drops from British American Tobacco and Hargreaves Lansdown,” said Spreadex analyst Connor Campbell.
The price of Brent crude oil rose 0.6% to $63.71 per barrel.
Several London-listed companies promised to funnel more cash to their shareholders on Wednesday.
Among them were Plus500, which promised to buy back shares for a further $25 million (£18m), after profits nearly tripled. The online trading company said it had seen “unprecedented” levels of activity on the platform, and shares rose 2.6%.
Rio Tinto promised shareholders cash as it announced a record dividend of $5.57 (£4) per share, as it was helped by a boom in commodity demand. Shares closed up 3.6%.
The biggest risers on the FTSE 100 were Antofagasta, up 78.5p to 1,714.5p, Hikma, up 56p to 2,392p, Rolls-Royce, up 2.36p to 102.3p, National Grid, up 16p to 864.6p, and B&M, up 11p to 601p.
The biggest fallers were Hargreaves Lansdown, down 113.5p to 1,539.5p, M&G, down 10p to 187.3p, British American Tobacco, down 108.5p to 2,640p, Polymetal, down 58p to 1,551p, and Avast, down 17.7p to 489.8p.