London’s top index finished 13.95 points, or 0.17%, lower to end the day at 8,085.07.
The FTSE 100 closed in the red after a weak session for housebuilders dragged on the index.
Housing firms – including Vistry, Berkeley and Persimmon – were dented by a sharper-than-expected rise in inflation last month.
The 2.3% CPI inflation reading for October led a raft of economists to suggest interest rates will not be cut again next month and could reduce the pace of rate cutting slightly further down the line.
Concerns over the impact of this on mortgage rates, and subsequent demand in the property market, therefore weighed on the sector’s stocks.
This more than offset the FTSE 100’s boost from a bumper session for tech firm Sage, which saw shares soar almost 18% on the back of higher profits.
London’s top index finished 13.95 points, or 0.17%, lower to end the day at 8,085.07.
The latest inflation figures also pulled sterling back towards the five-month-low it struck against the dollar earlier this week.
The pound was down 0.37% at 1.263 US dollars and up 0.38% at 1.200 euros.
Elsewhere in Europe, sentiment was weak amid concerns over potential escalation in the conflict between Russia and Ukraine.
The Cac 40 ended 0.43% lower for the day and the Dax index was down 0.31%.
Across the Atlantic, US stocks got off to a cautious start to trading, with Nvidia down slightly ahead of its key earnings update.
Chris Beauchamp, chief market analyst at IG, said: “Tuesday afternoon’s recovery in stock markets has been waylaid by news that Ukraine has now used British missiles against Russian targets, while tech stocks have been further hit by some pre-Nvidia earnings nerves.
“Now that the initial post-election euphoria has faded, it is clear that markets are struggling for a catalyst to provoke a new rally.”
In company news, Sage leapt after the software business launched a £400 million share buyback on the back of stronger profits.
Shares in the company were 17.9% higher after it said operating profits jump 43% for the past year as it benefited from stronger subscription revenues.
Property giant British Land was lower after it posted a fall in net rental income for the latest half-year.
Shares in the company were down 2.1% despite telling shareholders its plans to pump more investment into its retail parks is “paying off”.
Vistry Group shares dropped to a new 12-month-low after the housing firm announced the departure of its operations chief after recent profit warnings.
Shares in Vistry finished 6% lower as it was also dragged by broader weakness in the sector.
The price of oil moved higher on the back of worries the war in Ukraine could impact energy supply.
A barrel of Brent crude oil was up by 0.28% to 73.35 dollars (£58.03) as markets were closing in London.
The biggest risers on the FTSE 100 were Sage Group, up 192.5p to 1,269.5p, London Stock Exchange, up 170p to 10,900p, Imperial Brands, up 39p to 2,514p, Anglo American, up 35.5p to 2,340p, and Severn Trent, up 38p to 2,727p.
The biggest fallers on the FTSE 100 were Vistry, down 36.5p to 634p, B&M European, down 15.9p to 330.1p, ConvaTec, down 10p to 233p, Admiral Group, down 101p to 2,403p, and JD Sports, down 3.85p to 112.95p.
