Overnight commentaries from central banks in the US and Japan flag softening economic activity, sending global stock markets into reverse.
The FTSE 100 trades 0.6% lower at 5,930 in early deals, following losses of 3.1% on Japan’s Nikkei 225, a 2.0% drop in Hong Kong and smaller declines in the US and China.
Central banks remain in focus today as the Bank of England issues its own interest rate decision at midday after Federal Reserve and Bank of Japan statements overnight said interest rates will stay at historically low levels, as expected.
Sterling trades flat against the dollar as betting markets signal a rough 35% chance of Britain leaving the EU, slightly lower than a day earlier. A pound buys $1.414.
Falling interest rate expectations boost gold miners in early trading in London.
Ex-dividend stocks make up about one point of the 34 point FTSE 100 decline. Stocks going ex-dividend include private equity outfit 3i and water utility Severn Trent (SVT).
Ahead of UK retail sales data due at 9.30, specialist fit fashion purveyor N Brown (BWNG) rebounds 5% to 225.10p on relief over a reassuring first quarter trading update, flagging continued outperformance from key brands JD Williams, Simply Be and Jacamo.
CEO Angela Spindler maintains full-year guidance, downgraded with a profit warning in April.
The online retailer is the FTSE 350's biggest gainer.
Bookmaker William Hill (WMH) falls 3% to 284.7p after Investec cuts its recommendation from 'add' to 'reduce' and lowers its target price from 404p to 286p, arguing 2017 forecasts are at risk due to the impact of new 'self-exclusion' regulation.
Migrating players to a new technology platform has caused internal problems, while management changes could also cause upheaval, Investec says.
Profit before tax rose to £6.2 million (2015: £1.9 million) in the year to March, the dividend is maintained at 5p and there's a positive current trading statement too, Mulberry reporting 9% retail sales growth for the 11 weeks to 11 June.
Poundland (PLND) is 2.5% dearer at 205p as it is revealed bidder Steinhoff's (SNH:XFRA) has taken a near-23% stake.
Takeover excitement overshadows poor full-year results from Europe's biggest single-price discounter, showing a 13.5% slump in taxable profits to £37.8 million and a cut in the total dividend from 4.5p to 3.65p.
Shares move 1.7% higher to 347.9p as earnings per share fall from 28.8p to 22.0p.
Investors instead focus on higher occupancy, higher pricing and plans to open five new stores.
It is stuck in a complicated equity, warrant and loan note scheme with two financiers and hasn’t produced enough cash flow to meet capital expenditure requirements.