The FTSE 100 slipped 0.3 per cent after the bell this morning, falling well below the 7550 levels it had reached earlier in the week, before rallying back towards 7540.
Major European markets also fell in early trading with French CAC, Germanys DAX and the Spanish IBEX all falling over 0.20 per cent.
The FTSEs fall comes after a difficult day on Wall Street, with the Dow Jones closing at session lows after the Federal Reserve hinted at higher inflation, and reports that US President Donald Trump is planning to restrict Chinese telecom companies from selling equipment in the US.
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The US central bank did not raise interest rates, keeping them steady at 1.50-1.75 per cent. However, it did say that it expects inflation to run closer to its two per cent target in the coming months.
The Dow Jones closed 174.07 points down, while the S&P 500 fell 0.7 per cent, to 2,635.67. Falling shares in tech companies like Tesla, Spotify and Snap Inc also dragged the Nasdaq index down 29 points to 7,100.90.
“US inflation fears have spread globally and Europe looks set for a lower open on Thursday,” said Japser Lawler, head of research at London Capital Group.
“The fact that the Fed were not so bold about a June rate hike initially disappointed the market, pulling the dollar lower. However, it quickly recovered pushing the dollar back up almost to pre FOMC levels whilst higher yields weighed on US equities.”
Overnight, Asian shares also dipped with the MSCI Asia-Pacific index falling 0.5 percent, while South Korean stocks eased 0.4 percent. Japans Nikkei was closed for a holiday.