The FTSE 100 closed in the red on Friday despite better-than-forecast economic figures for August after it was dragged down by widespread negativity across Europe.
August’s flash PMI figures for UK industry showed accelerating growth across the manufacturing and services sector, surpassing analyst expectations.
However, many of the UK’s biggest stocks finished lower after disappointing figures from counterparts on the continent hit trading sentiment and drove concerns over exports.
London’s top flight closed 11.45 points lower at 6,001.89 at the end of trading on Friday.
David Madden, market analyst at CMC Markets UK, said: “Stock markets in Europe are showing large losses as traders are fearful the rebound in the eurozone economy is cooling.
“The flash manufacturing and services data for August from France was disappointing, and the German reports were not great either, so there are concerns the two largest economies in the euro area could be moving down a gear.
“In contrast, the UK manufacturing and services updates showed decent growth on the month as well as exceeding forecasts, but the FTSE 100 has been dragged lower by its continental counterparts.”
The German Dax decreased by 0.51%, while the French Cac moved 0.3% lower.
Across the Atlantic, the Dow Jones lifted higher after Wall Street welcomed robust manufacturing and services output in the latest set of US figures.
Meanwhile, sterling slumped against a strong dollar while a lack of progress in UK-EU talks also hit the currency.
The pound fell 0.91% versus the US dollar at 1.309 and was down 0.12% against the euro at 1.112.
Airline stocks had a rare bit of respite, floating higher after the UK Government added Portugal to its travel corridor list.
In company news, Rolls-Royce nudged higher after revealing it will enter into a strategic partnership with Reaction Engines to develop high-speed aircraft propulsion systems.
It lifted the engineering firm, which has struggled in recent months, by 2.3p to 258.3p at the close on Friday.
Premier Oil was in the red again after the company announced plans to raise 530 million US dollars (£404.7 million) from an equity release.
When the funds are raised, 230 million dollars will be paid to BP for North Sea oil assets, and 300 million dollars has been earmarked to pay down debt, it said.
It saw shares close 3.25p lower at 22.49p as a result.
Elsewhere, Amigo shares jumped higher after founder James Benamor tweeted to say he will release an announcement in the coming days about his return to the subprime lender.
He has been shedding his shares in the business after losing a vote to remove the company’s board, but now appears keen to return following a leadership shake-up after the vote. Shares closed 1.34p higher at 17.82p.
The price of oil dropped after the disappointing data from the eurozone prompted dealers to dump oil for fear the economic recovery is under threat.
The price of a barrel of Brent crude oil increased by 2.63% to 43.65 US dollars.
The biggest risers on the FTSE 100 were Intercontinental Hotels Group, up 250p at 4,280p, GVC, up 37.8p at 786.2p, Compass, up 33.5p at 1,163.5p, and Whitbread, up 66p at 2,398p.
The biggest fallers were Smith & Nephew, down 36p at 1,488p, DCC, down 130p at 6,636p, ITV, down 1.16p at 60.14p, and Coca-Cola HBC, down 38p at 2,018p.