The FTSE 100 was down 0.2% with losses across the board and the FTSE 250 was down 0.1% at 0725 GMT.

Rolls Royce gave up 1.1% after the U.S. Trade Representative Robert Lighthizer announced a proposal to impose tariffs on a list of European Union products as retaliation for EU aircraft building subsidies.

The proposed list, which ranges from large commercial aircraft and parts to dairy products and wine, is a retaliation against over US$11 billion worth of damage to US industry from EU subsidies to Airbus, Lighthizer said.

Meanwhile sterling rose on hopes that Britain would avoid a disorderly no-deal Brexit, with Prime Minister Theresa May due to meet German Chancellor Angela Merkel and French President Emmanuel Macron.

Parliament passed a law on Monday that gave lawmakers the power to scrutinise and even make legally binding changes to May’s request to extend the Article 50 negotiating period again.

Companies that have a greater international presence and earn a big share of their profits in the US dollar took a hit as the pound firmed.

AstraZeneca, GlaxoSmithKline and British American Tobacco fell in early deals.

In midcaps, bus and rail company Go-Ahead Group and environmental infrastructure firm Pennon Group both slipped 2% after rating cuts.

“There is a definite sense of caution which is keeping traders subdued as they shift their focus towards a busy second half to the week,” said London Capital Group analyst Jasper Lawler.