The FTSE 100 suffered its second consecutive day in the red on Tuesday as hopes faded of fast interest rate cuts in the UK and US in the coming months.
London’s blue-chip index fell 66.85 points, or 0.81%, to end the day at 8,195.2.
Economic data in the UK made for grim reading for people hoping for a succession of quick rate cuts from the Bank of England.
Wage growth has jumped higher for the first time in more than a year, reinforcing expectations that the Bank will hold interest rates later this week.
And an expected rise in inflation for November, to be released on Wednesday, could further dissuade policymakers from cuts next year.
It’s not the news that consumers and businesses buckling under financial pressures want to hear
Dan Coatsworth, investment analyst at AJ Bell, said the data “throws cold water” over hopes of a cut at the Bank’s meeting on Thursday.
He said: “It’s not the news that consumers and businesses buckling under financial pressures want to hear.”
Meanwhile, the US Federal Reserve will also announce whether to cut or hold at a meeting this week.
Mr Coatsworth added: “Any sense that rate cuts might become more pedestrian in the new year could cause a wobble on markets and some investors could be reducing their exposure until conditions move more in their favour.”
At the end of the day in Europe Frankfurt’s Dax index fell 0.30%, while the Cac 40 in Paris rose 0.12%.
In New York a little while after markets had closed in Europe the S&P 500 had fallen 0.36%, while the Dow Jones was 0.52% lower.
On currency markets the pound was trading 0.27% up against the dollar at 1.273 and was 0.31% up against the euro at 1.21.
In company news, outsourcing firm Capita announced fresh cost-cutting plans worth £250 million as it targets savings from the use of artificial intelligence and staff leaving voluntarily.
Shares in the firm fell 14.45% on Tuesday after it hiked its savings target from a previous £160 million.
Capita is a major contractor for the Government and local authorities, and also manages the licence fee for the BBC and runs recruitment for the British Army.
Elsewhere, Carlsberg’s £3.3 billion deal to buy Robinsons squash maker Britvic was given the green light by Britain’s competition watchdog, smoothing the way for one of the year’s biggest takeover deals.
The Competition and Markets Authority (CMA) had said in September it would launch an initial investigation, but confirmed on Tuesday it would not be referring the tie-up for a full in-depth investigation.
Brent Crude Futures were down 1.37% to 72.51 US dollars at the close of trading.
The biggest risers on the FTSE 100 were GSK, up 14p to 1333.5p, Haleon, up 3.8p to 384.7p, Compass Group, up 17p to 2672p, Sage Group, up 6p to 1305p, and Halma, up 12p to 2783p.
The biggest fallers on the FTSE 100 were Bunzl, down 202p to 3356p, JD Sports, down 2.74p to 96.24p, WPP, down 23.4p to 856.4p, CocaCola HBC, down 70p to 2702p, and Diageo, down 64p to 2536p.
