London shares saw red on the first day back of the year, with FTSE 100 closing down nearly 40 points, or 0.52% lower, at 7,648.
It comes as new data showed manufacturing growth had slowed more than expected in December - at 56.3, down from 58.2 in November.
The drop was expected to come in at to just 58.
The mid-cap FTSE 250 index was also down, dropping almost 45 points at 20,681.
In the currency markets, the pound was up 0.30% against the Euro and added 0.61% against the US dollar.
Across the pond, US shares started 2018 more positively, and the tech heavy Nasdaq boomed 96 points higher to 6,492.
BP (LON:BP.) shares slid 1,12% lower at 516.86p as it emerged the US tax reform in the US will cause the oil major to be hit by a one-off charge of US$1.5bn as it hits deferred tax assets and liabilities but the cut in corporate tax rates will benefit the firm in the long-run.
On FTSE 100, the top gainer was miner Anglo American (LON:AAL), which gained 2.94% to 1,595p. Top laggard was Rentokil Initial (LON:RTO), which shed 3.30% to 307.50p.
While the mood here in London is a little sombre, the US markets still think it's Christmas day!
Stocks across the pond have surged higher at the opening bell today. The Dow jones is up 0.4%, or 104.7 points, to 24,823.9; the tech-heavy Nasdaq is up more than 1%, or 71.7 points, to 6,975.3; while the benchmark S&P 500 has edged 0.6% higher to 2,688.9.
Most of those gains are down to the weak dollar, which has fallen against both the pound and the euro today.
As we head towards close of play, the markets definitely have that first day back to work feeling about them.
The FTSE 100 has plunged 0.8%, or 62.6 points, to 7,625.1 with a cooling UK manufacturing sector, stronger pound and a dearth of corporate news all contributing to a rather damp affair.
Dollar weakness today has seen sterling jump 0.4% against the greenback to US$1.355, which makes the blue chips' foreign-denominated worth less when translated back into pounds.
On the company front, it has been pretty quiet.
Insurers Admiral Group PLC (LON:ADM) (down 2.8% to ?19.46) and Direct Line Insurance Group PLC (LON:DLG) (down 2.7% to 371.1p) were both out of favour with investors, as was pest control group Rentokil Initial PLC (LON:RTO) which shed 2.8% to 309p, making it to the top footsie faller.
Eking out some gains were a couple of airliners on the bank of upgrades from Bank of America Merrill Lynch.
The heavyweight US bank moved low-cost carrier easyJet PLC (LON:EZJ) up to 'neutral' from 'underperform', sending the share price 1.2% higher to ?14.82.
BoA prefers British Airways owner International Consolidated Airlines Group PLC (LON:IAG) though, which it double upgraded all the way from 'underperform' to 'buy'.
IAG also confirmed this morning it had snapped up insolvent Austrian airline Niki as part of the fire sale of Air Berlin's assets. Shares are currently 2.6% in the black at 667.6p - top day's top blue chip gainer.
B&Q and Screwfix owner Kingfisher PLC (LON:KGF) was another boosted by a broker. It made it onto the Conviction Call List 2018 of Irish stockbroker Davy, which moved the group to an 'outperform' rating. That helped push the shares 2% higher to 344.3p.
This one's for the Londoners out there...
Workers near Barbican station are the best paid in London, according to a new study by job site Adzuna.
It analysed hundreds of job listings and found that average salaries in the area, which sits in the Square Mile and is famed for its arts centre and expensive properties, were just over ?52,700 a year.
The next highest paying locations were also tube stops in the City, with employees near Monument, Bank and Cannon Street raking in over ?51,000 on average.
Perhaps surprisingly, wages in the affluent area of Kensington and Chelsea were among the lowest, with jobs near High Street Kensington station paying an average of ?29,367 and those in Sloane Square paying less than ?26,000.
The lowest paid jobs in the capital are near to Uxbridge in West London, where workers took home an average of ?21,786.
January is one of the busiest times of years for job searchers! If you're looking for a new job in London, why not check out our alternative tube map of tube stop salaries? https://t.co/wOCuzSJLrp pic.twitter.com/1FYnvCqIR8
- Adzuna (@adzuna) January 2, 2018
The weak dollar looks set to benefit the US stock markets, which are all called higher at the opening bell.
Spread betting firms see the Dow Jones rising 56.5 points to 24,822.4 when the markets in New York open shortly, while the benchmark S&P 500 index is expected to open 6.3 points higher at 2,682.7.
The tech-heavy Nasdaq should complete the trio, jumping 21.5 points at the bell to 6,421.2.
"The Dow's had a pretty stagnant few weeks, failing to react too much to Trump's tax triumph as it struggles to break above 24800 with any sense of momentum," said Spreadex analyst Connor Campbell.
"A final Markit manufacturing PMI of 55.0 - an improvement on December's 53.9 - is unlikely to drastically change that."
It's always a quiet time of the year for news as the big blue chip bosses return from their holidays, so most of the big risers and fallers on the footsie today arose from broker upgrades.
B&Q and Screwfix owner Kingfisher PLC (LON:KGF) made it onto the Conviction Call List 2018 of Irish stockbroker Davy, which moved the group to an 'outperform' rating. That helped push the shares 1.4% higher to 342.4p.
Airliners were also in demand, with Bank of America Merrill Lynch taking a more bullish view of easyJet PLC (LON:EZJ) which it upgraded to 'neutral' from 'underperform', sending the share price 1.2% higher to ?14.82.
BoA prefers British Airways owner International Consolidated Airlines Group PLC (LON:IAG) though, which it double upgraded all the way from 'underperform' to 'buy'.
IAG also confirmed this morning it had snapped up insolvent Austrian airline Niki as part of the fire sale of Air Berlin's assets. Shares are currently 1.7% in the black at 661.7p on the back of both bits of news.
Centrica PLC (LON:CNA) is still the top riser on the FTSE 100 though, adding 2% to 140p as investors take a punt that the recent cold weather could boost profits at British Gas.
Overall though it's been a slow day for the footsie which has given up some of the gains it made during that record-breaking run in December.
The index is down 42.8 points, or 0.56%, to 7,645.0, with a resurgent pound partially to blame.
Sterling has jumped a tad over 0.4% to US$1.356, while it is flat against the euro at ?,?1.124 which is enjoying a post-Christmas rally of its own.
That makes the earnings of the internationally-focused constituents on the FTSE 100 worth more when translated back into pounds and pence.
Miners had been the biggest drag earlier on Tuesday but they've now moved off their session lows, with investment giant Standard Life Aberdeen PLC (LON:SLA) leading the losers - down 2.4% to 426.3p.
Europe's second large investment house revealed a couple of weeks ago that more than ?23bn had been pulled from its funds.
Admiral Group PLC (LON:ADM) would've hoped for a more enjoyable 25th birthday, but the stock is not far behind Standard Life - down 2.3% for the day to ?19.56.
The motor insurer was launched on 2 January 1993 with just one brand and a handful of customers. It now has 15 brands, 5mln customers and is worth almost ?6bn.
Security contractor G4S PLC (LON:GFS) took a beating as well, with 1.7% wiped from the value of its shares which are changing hands for 262.4p apiece.
The Co-op is set to spend ?160mln to open 100 additional food shops in the UK this year, creating 1,600 jobs in the process.
The aggressive expansion plan comes after it opened 104 stores and struck a ?137.5mln takeover of rival Nisa Retail last year - although the Competition and Markets Authority still has to approve it.
The new stores will be opened across the UK, while a chunk of the money has also been earmarked for refurbishing 150 stores.
Poundland's Johannesburg-listed owner Steinhoff has warned that its financial irregularities could stretch back to before 2015.
The company - which also owns Bensons for Beds and Harveys Furniture - saw 90% wiped from its value last month after it launched a probe into its book.
Steinhoff said today that its 2017 accounts would be accompanies by restated financials from 2015 and 2016, while it also cautioned that restatements "for years prior to 2015 is likely to be required".
It added that investors are "advised to exercise caution in relation to such statements" as the existing reports "can no longer be relied upon".
Mark and Spencer Group PLC (LON:MKS) has confirmed it will sell its stores in Hong Kong and Macau to franchise partner Al-Futtaim as part of an wider overhaul of the business.
M&S is selling 27 stores across the two regions for an undisclosed sum in deal that will keep it under a franchise arrangement.
Dubai-based Al-Futtaim will be left with 72 outlets under the brand across Asia and the Middle East.
The sale comes as M&S works to turnaround the business by offloading non-UK operations and cutting back on floor space devoted to its struggling clothing ranges.
The world's largest catering company Compass Group PLC (LON:CPG) has brought forward the start date for new chief executive Dominic Blakemore after the death of former boss Richard Cousins over the weekend.
Blakemore had been due to take over the reins from Cousins at the end of March but will start his new job today after Cousins was tragically killed alongside his family on Sunday.
The 58-year-old was in Sydney with his wife-to-be, her daughter and his two sons for New Year when a seaplane they were travelling in crashed.
"It has been a great privilege to know Richard personally and to work with him for the last few years," said chairman Paul Walsh.
"Richard was known and respected for his great humanity and a no-nonsense style that transformed Compass into one of Britain's leading companies."
The pound has slipped against the euro after HIS Markit's purchasing managers' index (PMI) for the manufacturing industry fell to 56.3 in December - down from a four-year high of 58.2 in November.
At 10.30am on Tuesday, sterling fell 0.14% to ?,?1.123 although it edged up slightly versus the dollar to US$1.355.
Anything above 50 still represents growth but last month's figure was below economists' expectations of 58, although the PMI stayed above its average for 2017 as a whole.
Overall, the general feeling is that the data added to signs that British manufacturers will prosper next year as they continue to get a tow from resurgence in Europe and the US.
"The latest UK manufacturing PMI shows that sector is still riding high on the wave of stronger global growth, and to a lesser extent, the weaker pound," said ING economist James Smith.
Key takeaways from the UK Manufacturing PMI pic.twitter.com/QcIAG5injC
- Anthony Barton (@AntBarton89) January 2, 2018
The FTSE 100 has got off to a slow start on its first day of trading in 2018, with the blue chip index retreating from the record highs set over the past few weeks.
Shortly after 10am UK time on Tuesday, the footsie was down 0.36%, or 27.3 points, to 7,660.6.
Most of those losses have been brought on by a spate of red across the mining stocks despite decent manufacturing data from China - the world's biggest consumer of commodities - overnight.
Rio Tinto PLC (LON:RIO) shed 2.1% to ?38.58, while fellow miners BHP Billiton plc (LON:BLT) (down 1.7% to ?14.97) and Antofagasta PLC (LON:ANTO) (down 1.7% to 988p) were also nursing sizeable falls.
On a more positive note, the recent cold weather up and down the UK has helped to boost the coffers at Centrica PLC (LON:CNA) - or so investors are hoping.
The British Gas owner is the top riser on the FTSE 100, gaining 2.5% to 140.8p.
British Airways' parent company International Consolidated Airlines Group PLC (LON:IAG) is also in demand, up 1.6% to 661.4p, after it confirmed the acquisition of insolvent Austrian airline Niki as part of the fire sale of Air Berlin's assets.
Elsewhere, troubled telecoms giant BT Group plc (LON:BT.A) is up 1.2% to 275.1p after Bank of America Merrill Lynch analysts moved their recommendation up to a 'buy'.
This is what the technical analysts, the stock market's tea leaf readers, call a resistance level.
The FTSE 100 should by most predictions have punched through 7,700 on the first day back in 2018, buoyed by encouraging economic data from China.
Instead, traders returned to their desks with a whimper rather than a roar, marking the index of blue-chip shares 15 points lower to 7,672.89.
The miners gave up some of the gains made across the festive period, with Rio Tinto (LON:RIO) leading the losers' list as it receded 1.7% early on.
ASOS (LON:ASC), AIM's largest company at ?5.5bn, was the beneficiary of an upgrade to 'buy' as Deutsche Bank gave carried out a comprehensive review of the retail sector ahead of the post-Christmas reporting season. Its shares rose less than 1%.
However Carpetright's (LON:CPR) were knock 5% lower after the London arm of the German outfit moved to 'hold' from 'buy' on the stock.
Forestry management company Active Energy Group PLC (LON:AEG) has successfully completed the initial testing of its five tonne per hour CoalSwitch biomass fuel plant in Utah.
Midatech Pharma Plc (LON:MTPH, NASDAQMTP) has secured a US$15mln, four-year senior loan facility that will be used to bankroll the clinical development of two promising cancer drug candidates. The funding has come via MidCap Financial, a middle market finance house, and Midtech has drawn down an initial US$7mln of the facility.
Victoria Oil & Gas plc (LON:VOG) has informed investors of a further extension to its proposed deal for the Bomono project and potential partnership with Bowleven Oil & Gas PLC (LON:BLVN).
Range Resources Ltd (LON:RRL) told investors that its latest well, at the Beach Marcelle field, is "one of the best" the company has drilled in recent years. The well, which has now been put on production, has been flowing at a stabilised rate of 120 barrels of oil per day, the company revealed.
BOS GLOBAL Holdings Ltd (LON:BOS) still needs to augment its board after announcing the appointment of one non-executive director - Will Giles - and the resignation of another, Mark Uren. The company's constitution stipulates that there should be at least three directors and at present it only has two.
Obtala Limited (LON:OBT) has announced the initial funding of a new wholly owned subsidiary, Obtala (Hong Kong) Limited, with the cash earmarked for the financing of the group's timber trading activities.
Ortac Resources Limited (LON:OTC) has appointed Jonathan de Thierry to its board of directors. de Thierry is a trained geologist with 25 years of experience to his name, and one of the founders of Casa Mining, which has now become the central asset in Ortac's portfolio.
Tower Resources PLC (LON:TRP) has issued share warrants to its directors, in lieu of fees, in order to preserve the company's working capital.
Caledonia Mining Corporation PLC has announced a quarterly dividend of US$0.06875 as gold production from the Blanket mine in Zimbabwe continues to throw off cash. Current guidance is for the mine to produce between 54,000 and 56,000 ounces of gold this year.
The Footsie is seen extending its record run in the first session of 2018 having risen to a new all-time peak in the final session of the old year, with miners expected to be to the fore as Asian shares scaled a decade peak after a survey of Chinese manufacturing proved surprisingly upbeat .
Spread betting firm London Capital Group expects the FTSE 100 index to open around 7 points higher at 7,694, having jumped 64.89 points in the half-day session last Friday to an all-time high of 7,687.77.
Jasper Lawler, head of research at London Capital Group said: "China set the tone for a day of manufacturing data with a positive reading on the Caixin manufacturing PMI. The data came in ahead of expectations at 51.7, well above the 50.6 expected and pushing activity in the Chinese manufacturing sector well into expansion territory. The evidence of continued demand from heavy industry in China helped give industrial metal prices a positive start to 2018."
He added: "The industrial data from China lends weight to the idea that the somewhat unexpected global growth rebound that underscored 2017 will continue into 2018."
Today's only domestic diary item is the latest UK manufacturing purchasing managers index (PMI), which will give the first indication of how well the UK economy performed in December and thus for the whole of 2017. December's construction PMI is due this Wednesday and the services PMI on Thursday.
Last month, the PMI tracking manufacturing rose to a 51-month high of 58.2, the construction PMI rose to 53.1, an encouraging reading, especially given that the index fell to below 50 in the summer suggesting contraction in the sector.
However, the Business Activity Index tracking services fell back to 53.8, mediocre by the standards of this index.
Together, the three UK PMIs for November suggested that the UK economy was on course for growth of 0.45% in the fourth quarter.
There will still not be very much else on the market's agenda in the coming week, although the two main events - a trading update from clothing retailer Next Plc tomorrow and the December US jobs report on Friday - will be of major importance going forward.
Awaiting a spate of trading updates in the next few weeks, retail stocks are sure to be active given the news that footfall on the high street for the Boxing Day sales was lacklustre.
Meanwhile, blue chip contract caterer Compass Group PLC (LON:CPG) could be under pressure following news of the death of its chief executive and his family in a seaplane crash in Australia on New Year's Eve.
Economic data: UK manufacturing PMI; US manufacturing PMI