The London market extended its losses on Tuesday as a rating agency sounded a bearish note on China and commodity prices.
The FTSE 100 Index fell further to stand 32.13 points off at 6263 in early trading.
The Dax in Frankfurt and the CAC-40 in Paris were also down despite a 0.1% rise in French industrial production.
Sentiment took a hit from a report by Moody's claiming that the main risks to the economic outlook would stem from a bigger-than-expected global fallout from the Chinese slowdown.
Moody's also said commodity prices were unlikely to rise significantly in the next few years. It added: "A large inventory build-up, a slow supply response and muted demand from
China and other key importers will all weigh on prices."
As if to bear out the comments, data out of Beijing showed Chinese inflation at its lowest since June.
CPI rose 1.3%, missing expectations of 1.5%, as the recent surge in pork prices starts to drop out of the numbers. It followed figures showing a drop in Chinese imports and exports last month.
Miners took a hit in the wake of the news. Anglo American (LON:AAL) dropped 21.3p to 494.7p, BHP Billiton (LON:BLT) reversed 8.1p to 944.3p and Glencore (LON:GLEN) eased 2.2p to 107.5p.
There was bad news on the retail front in the UK, where a survey from the British Retail Consortium showed UK retail sales in October falling 0.2% on a like-for-like basis against the same time a year ago,
Supermarkets also fell after Tesco boss Dave Lewis warned of potential extra costs from minimum wage increases and business rates. Tesco (TSCO) dipped 2.65p to 175.9p, Sainsbury (LON:SBRY) declined 2.6p to 270.7p and Morrisons (LON:MRW) was off 4.2p at 159.6p.
On the markets, Vodafone (LON:VOD) rang up 10.35p to 224.8p after increasing its full-year earnings guidance on the back of improving European markets.
But builder's merchant Wolseley (LON:WOS) subsided 189p or 5% to 3616p on news that trading in one of its core markets, Britain, was proving tough.
Investors switched on to ITV (LON:ITV) by 3.1p to 259.9p as the UK terrestrial broadcaster forecasted a double-digit profit rise this year and called the outlook encouraging.
Rockhopper Exploration (LON:RKH) ticked up 0.25p to 40.75p as it announced success with a drilling operation off the Italian coast.
Internet domain name provider Centralnic (LON:CNIC) sparked 5p or 9.3% to 59p after becoming the first web domain wholesaler to sell 2mln new top-level domain (TLD) names.
Petropavlovsk (LON:POG) sparkled 0.1p to 5.68p as a broker pointed out that an investment vehicle owned by Russian billionaire Viktor Vekselberg had bought into the gold miner.
LONDON OPEN
The London market dipped on Tuesday as traders fretted over more dismal Chinese data and a potential US December interest rate hike.
The FTSE 100 Index pared early gains to stand 10.72 points off at 6284 in early trading.
The Dax in Frankfurt and the CAC-40 in Paris were also down despite a 0.1% rise in French industrial production.
Data out of Beijing showed Chinese inflation at its lowest since June. CPI rose 1.3%, missing expectations of 1.5%, as the recent surge in pork prices starts to drop out of the numbers. It followed figures showing a drop in Chinese imports and exports last month.
Michael Hewson at CMC Markets said the “elephant in the room” was still worry about the Chinese economy.
"Given another sharp drop in the imports number at the weekend, it is no surprise that the latest Chinese inflation numbers have continued to underscore this concern," he said.
Hewson also pointed out that a known dove on the US Federal Open Markets Committee, Charles Evans, had softened his tone by saying he would not oppose a rise in rates in December if most other committee members wanted one.
On the markets, Vodafone (LON:VOD) rang up an 8.45p gain to 222.9p after increasing its full-year earnings guidance on the back of improving European markets.
But builder's merchant Wolseley (LON:WOS) subsided 173p or 4.5% to 3632p on news that trading in one of its core markets, Britain, was proving tough.
Investors switched on to ITV (LON:ITV) by 3.3p to 260.1p as the UK terrestrial broadcaster forecasted a double-digit profit rise this year and called the outlook encouraging.
Rockhopper Exploration (LON:RKH) ticked up 0.25p to 40.75p as it announced success with a drilling operation off the Italian coast.
Internet domain name provider Centralnic sparked 5p or 9.3% to 59p after becoming the first web domain wholesaler to sell 2mln new top-level domain (TLD) names.
MARKET PREVIEW
UK shares are called to open higher on Tuesday after sharp losses on global markets yesterday and as traders eye a possible Fed rate rise across the Pond.
The FTSE100 ended yesterday down 59 points at 6,295, while the Dow lost 180 points - its fourth consecutive day of losses. The German Dax ended 173 points lower at 10,815.
But today, financial spreadbetters at IG Index are calling the UK benchmark to open around 31 points higher.
It comes after the latest batch of Chinese data did nothing to lighten the mood and heightened fears over the slowdown of growth in the People's Republic.
The Shanghai Composite Index is down almost at eight at the time of writing - at 3,638.
The country's consumer price index (CPI) for last month (October) rose 1.3% against the same month a year earlier, which was below expectations of a 1.5% rise, while producer price index (PPI) fell 5.9% in October - its 44th straight month of declines after dropping 5.9 percent in the previous month.
Angus Nicholson, analyst at IG, noted: "In the wake of today’s CPI and PPI data, it is clear that there are currently low risks for an inflation overshoot if the Chinese central bank does choose to ease monetary policy. Questions will now turn to whether we will see a move on this front before the year is out..."
The question of when the US may raise rates, and December has been hinted at, was brought further into view, by Friday’s much better than expected US job creation number.
In a 'normal' world, a positive sign, but it also signalled the beginning of the end for the era of very cheap money, which has made investors jittery.