Other major European markets also closed lower as the German Dax decreased by 0.3%, while the French Cac moved 0.63% lower
London markets drifted into the red after the strong pound hit British multinational firms.
European markets showed respite after noon to lift on a strong opening in the US, but lost momentum to finish firmly lower as US-China tensions heightened again.
US president Donald Trump’s decision to tighten restrictions on Huawei knocked sentiment which appeared to be recovering.
The FTSE 100 closed 50.82 points lower at 6,076.62 at the end of trading on Tuesday.
Connor Campbell, financial analyst at Spreadex, said: After mounting something of a recovery at lunchtime, the Western markets lurched back into the red as Tuesday’s session went on. Things had been going so well that the S&P 500 had hit a fresh all-time intra-day high. And then, all of a sudden, investors got scared, with global indices quickly tumbling following that peak.
The other major European markets also closed lower, although German stocks held up relatively well after the country reported a significant rise in new Covid-19 cases.
The German Dax decreased by 0.3%, while the French Cac moved 0.63% lower.
Across the Atlantic, the S&P 500 leapt to the new intra-day record high after US house-building figures for July topped forecasts, showing shoots of recovery in the economy.
Meanwhile, sterling pushed confidently higher after the dollar weakened on concerns that US legislators are not close to reaching an agreement on the coronavirus relief package.
The pound rose 0.91% versus the US dollar at 1.322 and was up 0.41% against the euro at 1.108.
Multinationals with significant US operations, such GlaxoSmithKline, BAT and Unilever, were notable fallers as a result of unfavourable currency movements.
In company news, Marks & Spencer dived after revealing 7,000 jobs are being axed at the high street stalwart as it continues to overhaul operations.
It said the bulk of the cuts, which will take place over the next three months, would be made across its stores, as well as a smaller number of support centre and regional management workers.
Shares in the company dropped by 5.55p to 108.05p as a result.
Elsewhere, Mike Ashley’s retail firm Frasers Group saw shares slide after informing the City its chairman David Daly accidentally breached rules by purchasing shares during the closed period.
Mr Daly appeared to breach stock market rules by buying roughly £11,000 in company shares ahead of its full-year results announcement on Thursday.
Frasers shares fell by 6.2p to 282.8p at the close of play.
Persimmon shares surged after the housebuilder said the lifting of restrictions and resumption of construction means building levels returned to pre-Covid levels by the end of June.
It saw shares rise by 209p to 2,822p despite also revealing that pre-tax profits fell by 43% over the first half of 2020.
The price of oil nudged higher after recovering from an early retreat from Monday’s gains, moving higher again due to demand from state-owned companies in China.
The price of a barrel of Brent crude oil increased by 0.13% to 45.4 US dollars.
The biggest risers on the FTSE 100 were Persimmon, up 209p at 2,822p, Barratt, up 13p at 534.4p, Ferguson, up 160p at 7,400p, and Fresnillo, up 19.5p at 1,271p.
The biggest fallers of the day were Pearson, down 590.4p, Intercontinental Hotels Group, down 109p at 3,939p, Rightmove, down 17p at 614.4p, and BHP, down 47p at 1,794.2p.
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