anks and commodity stocks led the fallers as London’s top markets closed lower on Tuesday.
Italian plans to hit banks in the country with a new 40% windfall tax have knocked financial stocks across the continent.
Global trading sentiment was already weak during the session after official figures showed Chinese imports and exports both tumbled more sharply than expected last month, stoking further concerns over the global economic recovery.
The FTSE 100 moved 0.36%, or 27.07 points, lower to finish at 7,527.42.
Germany’s Dax index was 1.1% lower for the day and the Cac 40 closed down 0.69%.
Chris Beauchamp, chief market analyst at IG, said: “Last week’s US credit rating downgrade seemed like the perfect beginning of a market selloff, but this morning’s abysmal China trade data is a much more compelling reason for investors to cut back on risk.
“Bank stocks have taken the brunt of the selling in Europe today thanks to the news of a potential windfall tax in Italy.
“Where one country goes, others might follow, and with plenty of elections in coming months politicians across the continent might look to juice their poll ratings with hints of taxes on banks and indeed other sectors that could be accused of profiting while consumers struggle.”
Meanwhile, sterling fell on Tuesday as British Retail Consortium (BRC) industry sales figures showed a slowdown in trade last month.
The pound was down 0.45% to 1.272 US dollars and was 0.05% higher at 1.162 euros at market close in London.
In company news, Abrdn was the FTSE 100’s heaviest faller as the asset management firm reported shrinking assets and a drop in profits for its investment division.
It recorded a 16% jump in net outflows to £4.4 billion, as more people moved money out of funds and investments with Abrdn.
Shares in the firm were down 25.5p to 193p at the end of trading.
Shares in InterContinental Hotels Group (IHG) gained on Tuesday on the back of higher sales as it told shareholders there have been “no signs” of people cutting back on leisure trips.
The Holiday Inn owner reported revenues hit one billion US dollars (£780 million) in the half year to the end of June, up 23% from 840 million dollars (£658 million) the year prior.
IHG finished the day up 132p at 5,790p.
Glencore dropped in value after its profits were cut in half due to easing commodity prices.
The mining and trading firm had been boosted last year by the higher prices for coal and other commodities following the invasion of Ukraine but has now seen these gains ebb away. Glencore shares were down 12.1p at 444.6p.
The price of a barrel of Brent crude oil fell by 0.15% to 85.22 US dollars at the time markets were closing in London.
The biggest risers on the FTSE 100 were Beazley, up 26p at 530p, IHG, up 132p at 5,790p, Hiscox, up 18p at 1,113p, Admiral Group, up 32p at 2,150p, and AstraZeneca, up 144p at 11,030p.
The biggest fallers of the session were Abrdn, down 25.5p at 193p, Fresnillo, down 19p at 544.2p, Melrose, down 16.2p at 527p, Glencore, down 12.1p at 444.6p, and Barclays, down 3.74p at 147.08p.