Sharecast - The FTSE 100 was 0.5% lower at 7,558.02.
Sentiment took a hit after Bundesbank President Joachim Nagel said on Monday that it was too early to talk about rate cuts, while Austrian central bank governor Robert Holzmann said we shouldn’t count on rate cuts at all in 2024.
On home shores, figures from the Office for National Statistics showed that wage growth eased in the three months to November, while unemployment was unchanged.
Total pay including bonuses rose 6.5%, down from 7.2% in the previous three-month period and in line with consensus expectations.
Meanwhile, the unemployment rate was unchanged at 4.2% in the three months to November and the ONS estimated that the number of payrolled employees in December fell by 24,000 from a revised November figure to 30.2m.
The ONS data showed that the number of vacancies fell by 49,000 in the three months to December to 934,000. This marked the 18 consecutive decline and the longest run of falls ever recorded.
Russ Mould, investment director at AJ Bell, said: "Part of the problem is central banks constantly teasing the prospect of rate cuts but then refusing to commit, which is causing unease among investors. There are plenty of signs that inflation is coming down and this is fuelling the rate cut expectations on the market, yet central banks are being spectacularly stubborn.
"To stir the pot, UK wages grew at their slowest pace in almost a year, extending the view that inflationary pressures are easing. Data points like these don’t seem enough to put central banks on a different path and we’re facing the risk that the likes of the Bank of England and European Central Bank will act too late to avoid a sharp economic slowdown."
In equity markets, Rightmove (LON:RMV) was knocked lower by a downgrade to ‘underweight’ from ‘neutral’ at JPMorgan (NYSE:JPM), while Rolls-Royce (LON:RR) was hit by a downgrade to ‘sell’ at Berenberg.
AstraZeneca (NASDAQ:AZN) was in the red after a downgrade to ‘sell’ at UBS, while Moneysupermarket (LON:MONY) slumped after a downgrade to ‘hold’ at Jefferies.
Trustpilot (LON:TRST) was under the cosh after Berenberg sold just over 5.17m shares in the review website in a placing on behalf of shareholder Northzone.
On the upside, Ocado (LON:OCDO) surged after the online grocer forecast a return to positive earnings for 2022/23 year as fourth-quarter revenues rose by almost 11%.
Experian rallied as it narrowed its full-year targets to the upper end of guidance after a strong third quarter with revenue growth accelerating from the first half.
Vodafone (LON:VOD) nudged up after it signed a 10-year strategic partnership with Microsoft (NASDAQ:MSFT) which will see the UK telecoms group invest $1.5bn over the next decade to transform its customer experience using generative artificial intelligence.
Spirent Communications (LON:SPT) jumped after it said full-year results were in line with its revised expectations following a challenging year.
Qinetiq (LON:QQ) rose as the defence and security firm backed its full-year expectations, hailed "excellent" order intake and announced plans to launch a share buyback of up to £100m.
Direct Line (LON:DLGD) was boosted by an upgrade to ‘buy’ at Berenberg.
Market Movers
FTSE 100 (UKX) 7,558.02 -0.49%
FTSE 250 (MCX) 19,161.88 -0.20%
techMARK (TASX) 4,298.73 0.24%
FTSE 100 - Risers
Ocado Group (OCDO) 647.60p 4.62%
Experian (EXPN) 3,201.00p 2.40%
Pearson (LON:PSON) 992.00p 1.25%
Burberry Group (LON:BRBY) 1,227.00p 1.24%
Hikma Pharmaceuticals (LON:HIK) 1,950.00p 0.88%
Rio Tinto (LON:RIO) 5,483.00p 0.79%
St James's Place (STJ) 632.60p 0.76%
BAE Systems (LON:BAES) (BA.) 1,187.00p 0.76%
Sainsbury (J) (SBRY) 289.80p 0.69%
Entain (LON:ENT) 948.60p 0.66%
FTSE 100 - Fallers
Rightmove (RMV) 537.40p -4.85%
AstraZeneca (AZN) 10,562.00p -2.67%
Scottish Mortgage Inv Trust (SMT) 755.20p -2.38%
JD Sports Fashion (JD.) 111.05p -1.99%
Standard Chartered (LON:STAN) 593.40p -1.92%
Legal & General Group (LGEN) 248.20p -1.70%
Fresnillo (LON:FRES) 518.40p -1.67%
Centrica (LON:CNA) 147.35p -1.64%
BT Group (LON:BT.A) 114.40p -1.63%
Airtel Africa (AAF) 128.40p -1.61%
FTSE 250 - Risers
Spirent Communications (SPT) 124.30p 7.34%
Harbour Energy (LON:HBR) 315.90p 6.51%
QinetiQ Group (QQ.) 337.40p 6.03%
Ferrexpo (LON:FXPO) 74.90p 4.76%
AJ Bell (AJB) 297.60p 2.20%
Bytes Technology Group (LON:BYIT) 602.50p 1.95%
Wood Group (John) (WG.) 168.40p 1.75%
Genus (LON:GNS) 2,208.00p 1.75%
Energean (ENOG) 972.00p 1.67%
3i (LON:III) Infrastructure (3IN) 319.00p 1.27%
FTSE 250 - Fallers
Moneysupermarket.com Group (MONY) 247.60p -7.82%
Drax Group (LON:DRX) 512.40p -3.86%
Helios Towers (HTWS) 88.00p -3.30%
Trustpilot Group (TRST) 160.50p -2.85%
TUI (LON:TUIT) AG Reg Shs (DI) (TUI) 537.00p -2.63%
Crest Nicholson Holdings (LON:CRST) 209.20p -2.61%
Savills (LON:SVS) 983.00p -2.19%
Ninety One (N91) 178.20p -2.03%
ITV (LON:ITV) 59.46p -2.01%
Travis Perkins (LON:TPK) 760.60p -1.73%