Britain's mid-cap index recovered early losses thanks to a small bounceback from retail stocks after an ASOS-led selloff, while the blue-chip index fell as perpetuating concerns over slowing global growth and an oversupply of oil spooked investors.
The FTSE 100 was down 0.4 percent while an uptick in retail stocks following sharp falls on Monday helped the mid-cap index erase initial losses and edge 0.4 percent higher.
Retailers caught their breath after a selloff in the aftermath of Monday's profit warning from ASOS that sent shivers through the global retail industry.
The FTSE 100 tracked losses on Wall Street, where the S&P 500 slipped to its lowest in more than a year on persisting concerns of a slowing global economy.
"This is a very downbeat market sentiment which has deteriorated very severely," said Candriam strategist Stefan Keller. "Geopolitical uncertainty is likely to shape or shake financial markets in 2019."
Keller added that the selloff already experienced this year has restored some equity risk premium, particularly in emerging markets, and to some extent in the euro zone as valuations have come down significantly.
Investors were also bracing themselves for a decision from the U.S. Federal Reserve on the course of interest-rate hikes, with many believing a rate increase is likely.
With just over three months to exit the European Union, Prime Minister Theresa May said she would bring her divorce deal back to parliament for a mid-January vote, even as government remains deadlocked over the terms of the agreement.
Dragging the FTSE 100 down were oil and related stocks that faced pressure from a sharp fall in crude prices on oversupply worries.
Shell dipped nearly 2 percent after a Bloomberg report https://www.bloomberg.com/news/articles/2018-12-17/shell-is-said-to-eye-deal-for-endeavor-energy-as-price-tag-drops that the oil giant is in talks to buy Texas-based Endeavor Energy Resources LP for about $8 billion.
Oil major BP also lost 1 percent, while oilfield and engineering services provider Wood Plc fell 2 percent.
Electricity and gas utility firm National Grid was among top blue-chip losers after Britain's energy regulator proposed further cuts to the cost of capital for networks.
National Grid shares were down 6 percent at the bottom of the FTSE and on track for its worst day in two years, with peers SSE and Centrica falling nearly 2 percent.
Shire dropped 4.2 percent, extending losses for the second session after rating agency Moody's downgraded Takeda , saying that its takeover of Shire will cause an almost six-fold increase to the Japanese drugmaker's debt.
Premier Oil and Tullow Oil fell 4.8 percent and 2.7 percent respectively to the bottom of the mid-cap index.
Bucking the trend was oilfield services provider Petrofac Ltd, which rose 5.1 percent after saying its debt would come in at around $250 million at year end, half the consensus expectation of $500 million, according to Jefferies analysts.
ASOS, which had its biggest ever fall on Monday, eked out a 1.6 percent gain after Credit Suisse said the AIM-listed retailer had the business model with market potential to grow and upgraded the stock.
Fellow retailers Superdry, Next, Marks & Spencer, Boohoo and Kingfisher all rose between 2.2 percent and 5.2 percent, with Superdry among the top mid-cap gainers.
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