London's FTSE 100 suffered its worst day in two weeks on Tuesday as the spread of a new coronavirus in China curbed risk appetite and oil prices fell sharply, while jobs data eased some bets of an imminent interest rate cut by the Bank of England.

China reported six deaths from the virus, which is being likened to the deadly 2002/2003 spread of Severe Acute Respiratory Syndrome (SARS), just ahead of the Chinese Lunar New Year holiday. The FTSE 100 shed 0.5%, as luxury and travel stocks led losses. British Airways-owner IAG fell 3% and InterContinental Hotels Group Plc slipped 3.5%. The FTSE 250 also gave up 0.5%.

Still, the indexes were off their session lows, as only a mild drop on Wall Street suggested that fears may have been overplayed. "The initial sell-off was just another buying opportunity as optimism remains that China will contain the spread," OANDA analyst Edward Moya said.

Shares of firms that book a major chunk of their earnings in US dollars weakened as sterling gained after a robust UK jobs report helped trim the odds of a BoE rate cut this month. Imperial Brands Plc gave up 2.6%. But markets have still priced in near-term policy easing, with the central bank still widely expected to pull the trigger on a 25-basis point cut.

"Data has turned notably softer and the BoE doesn't want to risk allowing weakness to become entrenched. There is a sense the bank doesn't want to get behind the curve of market expectations," Markets.com analyst Neil Wilson said. "It would be following the (US) Fed's playbook in cutting early in order to prevent a downturn."

Broader sentiment and Swiss bank UBS cutting its mid-term targets led a sub-index of financial stocks to its lowest since mid-December. Yet hopes that the BoE may hold rates steady helped domestic banks Lloyds and RBS add 1% each.

Royal Dutch Shell Plc and BP also weighed as crude prices fell on expectations that the market would be able to manage the severe cuts to Libya's production. However, low-cost airline easyJet outshone the blue-chip bourse with a 4.6% rise after it forecast improvement in its first-half winter performance.

Among midcaps, electrical products retailer Dixons Carphone starred with a 7% gain after affirming its annual targets, while wealth manager Quilter jumped 6.3% on a report of a takeover.