Sharecast - The FTSE 100 was down 0.3% at 7,544.41.
Russ Mould, investment director at AJ Bell, said: "We’re very much in looking glass territory again with investors desperate for the Fed to ease up on rate hikes and therefore taking any bit of good news about the economy as bad news because it will delay the longed-for pivot.
"Better-than-expected figures from the US services sector, combined with some profit taking after a strong run, resulted in losses across the Atlantic overnight and the negativity permeated into Asian shares with some of the optimism about a loosening of Chinese restrictions also beginning to fade.
"The next key US releases come on Friday with producer prices data and a reading of consumer sentiment. Next Wednesday is decision day on US rates and the Fed’s actions could help set the tone for the tail end of 2022 and first weeks of 2023."
On home shores, investors were mulling over industry data showing that Black Friday and the colder weather helped boost high street sales last month.
According to the latest BRC-KPMG Retail Sales Monitor, sales in the four weeks to 26 November rose 4.2%, compared to a rise of 5.0% a year earlier.
Separately, a survey showed that the construction sector faltered last month as higher borrowing costs and the weaker economic outlook curbed demand.
The S&P Global/CIPS UK Construction Purchasing Managers’ Index fell to 50.4 in November, from 53.2 in October. It is the third consecutive month that the index has fallen, and well below the consensus for 52.0.
A reading above 50.0 indicates growth, while a reading below suggests contraction.
The latest data from retail consultancy Kantar was also in focus, showing that food inflation eased marginally in November, the first decline in nearly two years.
Grocery price inflation eased 0.1 percentage points to 14.6% last month, the first fall in 21 months. However, it remains at record highs, with the price of a traditional Christmas dinner, including frozen turkey, sprouts, sparkling wine and cranberry sauce, now costing £31, up 9.3% on 2021.
In equity markets, broker notes were having an impact.
Mondi (LON:MNDI) was knocked lower by a double downgrade to ‘underperform’ at Credit Suisse (SIX:CSGN), while Close Brothers fell after a downgrade to ‘underweight’ at JPMorgan (NYSE:JPM). Lloyds (LON:LLOY) was off after a downgrade to ‘neutral’ at JPM and United Utilities was also hit by a downgrade to ‘neutral’ at JPM.
On the upside, Rolls-Royce (LON:RR) rallied after the US awarded its Future Long-Range Assault Aircraft, FLRAA to Textron's V-280 Valor project. The program is meant to replace the Black Hawk utility helicopters and Apache attack helicopters and first delivery is expected in 2030. Rolls-Royce provides two AE 1107F engines to power the V-280 Valor.
Jefferies said in a note that for Rolls-Royce, this win represents a "significant" long-term boost for the defence division.
DS Smith was lifted by an upgrade to ‘outperform’ at Credit Suisse, while Barclays (LON:BARC) was up after an upgrade to ‘overweight at JPM and Hikma gained after an initiation at ‘outperform’ by RBC Capital.
Travel food outlet operator SSP Group surged after saying it swung to a full-year profit as passenger numbers rebounded from the Covid pandemic.
Elsewhere, Phoenix Group, Tritax and Paragon Banking all rose after well-received updates.
Market Movers
FTSE 100 (UKX) 7,544.41 -0.31%
FTSE 250 (MCX) 19,204.19 -0.65%
techMARK (TASX) 4,401.19 -0.52%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 93.77p 3.51%
Phoenix Group Holdings (PHNX) 612.20p 2.68%
Barclays (BARC) 159.30p 1.93%
BAE Systems (LON:BAES) (BA.) 830.00p 1.72%
Land Securities Group (LAND) 630.40p 1.42%
British Land Company (BLND) 405.90p 1.17%
Croda International (CRDA) 6,994.00p 1.16%
M&G (MNG) 188.55p 0.94%
Smith (DS) (SMDS) 307.70p 0.79%
Informa (INF) 623.00p 0.78%
FTSE 100 - Fallers
Mondi (MNDI) 1,476.50p -4.19%
United Utilities Group (UU.) 1,030.50p -2.46%
Ocado Group (LON:OCDO) 648.80p -2.17%
Vodafone Group (LON:VOD) 89.08p -2.13%
Endeavour Mining (EDV) 1,714.00p -2.06%
Airtel Africa (AAF) 119.90p -2.04%
Severn Trent (LON:SVT) 2,705.00p -1.96%
Fresnillo (LON:FRES) 880.00p -1.90%
B&M European Value Retail S.A. (DI) (BME) 412.10p -1.79%
Harbour Energy (HBR) 303.90p -1.78%
FTSE 250 - Risers
SSP Group (SSPG) 224.80p 3.88%
Paragon Banking Group (PAG) 479.60p 3.27%
Coats Group (LON:COA) 68.90p 3.14%
Bank of Georgia Group (BGEO) 2,615.00p 2.35%
Tritax Eurobox (GBP) (EBOX) 68.10p 2.25%
Home Reit (HOME) 51.20p 2.20%
Plus500 (LON:PLUSP) Ltd (DI) (PLUS) 1,848.00p 1.87%
Sirius Real Estate Ltd. (SRE) 83.70p 1.70%
Investec (INVP) 494.30p 1.54%
HGCapital Trust (HGT) 362.50p 1.54%
FTSE 250 - Fallers
Darktrace (LON:DARK) 329.50p -5.99%
AJ Bell (AJB) 360.60p -5.95%
Aston Martin Lagonda Global Holdings (AML) 133.20p -5.53%
Liontrust Asset Management (LIO) 1,074.00p -3.94%
Discoverie Group (DSCV) 809.00p -3.69%
Victrex (LON:VCTX) plc (VCT) 1,717.00p -3.65%
Diversified Energy Company (DEC) 119.20p -3.64%
Currys (CURY) 72.20p -3.54%
Pennon Group (LON:PNN) 922.00p -3.51%
IP Group (LON:IPO) 64.35p -3.45%