Sharecast - The FTSE 100 fell 0.49% to 7,852.64, while the FTSE 250 decreased by 0.04% to 19,207.97.
Retail sales were also in focus, with a cautious mood in the sector persisting despite a slight uptick in sales through April.
Sterling, meanwhile, was last up 0.64% on the dollar, trading at $1.2488, while it weakened 0.11% against the euro to change hands at €1.1296.
“Steep losses for pharma stocks in London ahead of AstraZeneca's (LON:AZN) earnings tomorrow have kept the FTSE 100 in the red, despite a rise for housebuilders,” said IG chief market analyst Chris Beauchamp.
“Persimmon’s update this morning pointed towards a cautious recovery in activity, though the big worry is that the ongoing battle with inflation will force the Bank of England into more hikes than previously expected.”
Retail sales edge higher in April as caution lingers
In economic news, UK retail sales increased slightly in April according to the latest CBI distributive trades survey.
While it revealed that sales volumes in the year to April were up, with the weighted balance rising to +5 from +1 in March, retailers reportedly remained cautious.
Sales were viewed as good for the time of year, with a balance of +21, up from +12.
However, some respondents said they expected sales volumes to decrease next month, with a balance of -7.
“An uptick in sales in April [was] perhaps enabled by the 10.1% increase in the value of benefits, including the state pension, at the start of the month,” said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.
“The boost however, will prove temporary, given that the real value will decline again over the coming months as prices continue to rise.
“In addition, both business surveys and the Insolvency Service’s data on redundancy notifications suggest employment will merely flatline over the coming months.”
Overall, Dickens said households’ real disposable incomes would likely hold broadly stable in the second quarter, before a recovery took hold in the third, supported by a drop back in energy prices.
“We think that the volume of retail sales will end the year up just 1% year-over-year.”
On the continent, German consumer sentiment looked set to improve next month, driven by expected wage increases and softer energy prices.
GfK’s consumer sentiment index rose to -25.7, from a slightly upwardly-revised -29.3 in April, making for the seventh increase in a row and beating expectations of a reading of -27.9.
Across the pond, meanwhile, the US trade deficit in goods with the rest of the world shrank unexpectedly last month, according to the Department of Commerce.
The visible trade deficit fell by 8.1% month-on-month to reach $84.6bn in seasonally-adjusted terms, beating economists' expectations for a shortfall of -$90bn.
Exports increased 2.8% to $172.7bn, while imports decreased by 1.0% to $257.3bn.
AB Foods falls for a second day, housebuilders on the rise
On London’s equity markets, Associated British Foods (LON:ABF) fell 2.12%, with the Primark owner under pressure after disappointing results a day earlier.
Consumer goods giant Reckitt Benckiser Group PLC (LON:RKT) was off 3.35% after it announced the appointment of a new chief executive, and reported a rise in first-quarter sales amid price hikes.
Bunzl (LON:BNZL) retreated 1.62% despite expecting annual revenue and operating margin to be slightly ahead of forecasts, while it reported an 8.4% increase in first-quarter sales.
Building materials supplier CRH (LON:CRH) also lost ground, declining 3.28% despite reporting a "positive" start to the year, with first-quarter sales and EBITDA ahead of the prior year amid good demand.
GSK (LON:GSK) edged down 4.03% after it said first-quarter profits and revenue both beat expectations, driven by its shingles and meningitis treatments, among others.
Harbour Energy (LON:HBR) reversed earlier gains to slip 0.08%, despite reporting an oil discovery from the Kan-1 exploration well off Mexico.
On the upside, housebuilders were among the top performers after well-received results from Persimmon (LON:PSN), which posted a slump in first-quarter completions but said it expected full-year 2023 volumes to be towards the top end of guidance after an improvement in sales rates since the start of the year.
Persimmon's share price increased 4.89%, with peers Taylor Wimpey (LON:TW) and Barratt Developments (LON:BDEV) rising 3.72% and 2.97%, respectively.
Standard Chartered (LON:STAN) pushed 2.16% higher after it posted better-than-expected first-quarter profits, driven by higher interest rates, and forecast annual earnings at the top end of guidance.
“Given the turmoil we’ve seen in the banking sector over recent weeks, even in the last 24 hours with First Republic's (NYSE:FRC) woes so front of minds, it’s a breath of fresh air to see Standard Chartered surpass earnings expectations and post a pretty upbeat outlook,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Higher interest rates continue to act as a headwind for profits, but arguably more important in the current climate was the robust customer deposit numbers and a credit impairment charge of just $26m, well below market expectations.
“This was a resilient set of results that should help to quell some of the fears that issues are systemic throughout the sector.”
Drax Group (LON:DRX) powered ahead by 1.68% after launching a £150m share buyback and suspending carbon capture projects pending further talks with the government on subsidies.
The company also said it expected full-year adjusted core earnings to be in line with analysts' consensus estimates.
Finally, Smith & Nephew (LON:SN) gained 1.61% after the medical equipment manufacturer reiterated its guidance, following an improvement in revenue in the first quarter.
Reporting by Josh White for Sharecast.com.