The FTSE 100 closed down 30.50 points at 7725.43, as traders focused on disappointing updates from Burberry and US financial giant Goldman Sachs.
German and French markets were also in the red, while on Wall Street the Dow Jones rose 153.5 points to 25,946.40. Brent crude was at $69.33 a barrel and the pound was at $1.38 against the dollar.
‘Burberry shares have fallen out of fashion with investors as the turnaround in the pound has curtailed wealthy international shoppers at their UK stores,’ said David Madden, market analyst at CMC Markets.
‘The retailer enjoyed a flurry of business at its British stores in the wake of the EU referendum, and now that has evaporated. Burberry is still performing well in China, which is one of its fastest growing divisions.
‘Interserve have been caught up in the Carillion-chaos, as the government is now monitoring the company. Since the collapse of Carillion, Westminster has started keeping an eye on companies that it has contracts with.
‘Interserve aren’t without their own problems, as the company issued a profit warning in October. The stock sold-off heavily in initial trading, but is now only down 1 per cent – it would appear there was an overreaction this morning.’
Burberry plunged 9.3 per cent or 166p to 1,619p, but Interserve eventually ended down 0.4 per cent or 0.5p at 120.5p.
Chris Beauchamp, chief market analyst at IG, said: ‘Sentiment, already weak on a day of bad news for the likes of Burberry, has not been helped by a disappointing set of numbers from Goldman Sachs.
‘2017 was a year of low volatility, and thus it was not exactly surprising to see this lack of activity hit the key bond trading business.
‘While the bank had hinted about this, the magnitude of the drop was the surprise. Markets are still within touching distance of record highs, but now we’re into the second half of January it is traditional to see equity markets weaken for a time.’