The FTSE-100 closed 2.2 points lower at 5869 as rival political leaders in the US discussed how to avoid a raft of automatic tax hikes and spending cuts next month.
There was further disappointment earlier over Monday's weaker-than-expected US manufacturing report revealing a contraction in the sector in November.
Investors were nervously awaiting today's autumn statement from Chancellor George Osborne, in which he is expected to change or abandon his goal to cut the UK's debt as a percentage of GDP by 2015/2016.
Fears that political leaders will fail to secure a budget deal meant New York-listed oil prices dropped towards $88 a barrel.
The pound was up against the US dollar at 1.60 as the manufacturing figures hit the greenback. Sterling was down against the euro at 1.23.
This had an impact on BP, which was 1%, or 5.9p, lower at 424.3p, while in the mining sector Randgold Resources was 185p down at 6480p.
Tullow Oil was a big faller as it said an appraisal well off French Guiana had not encountered hydrocarbons. Shares fell 6%, or 79p, to 1292p.
Financial stocks did their best to prop up London's top flight, with Royal Bank of Scotland up 3.1p to 295.7p and Lloyds Banking Group 0.2p higher at 45.9p. In the insurance sector, Aviva was 4.7p stronger at 355.5p and RSA cheered 1.4p to 120.7p, a 1% rise.
Supermarket Tesco gained as investors positioned themselves for a potential surprise in today's trading update. Analysts are currently forecasting a return to sales falls as general merchandise continues to take a hit.
A survey of till rolls by Kantar Worldpanel showed Tesco saw growth of 2.2% in the 12 weeks to November 25, giving it a market share of 30.7%. Shares rose 4.2p to 326.7p.
Sainsbury's continued to outperform its rivals by snapping up a share of 16.9% for the same period, although its shares dropped 0.3p to 337p yesterday.
Morrisons fell 1.9p to 264.3p after Kantar said its market share dropped to 11.7% from 12.3% a year earlier.
Holiday company TUI Travel made headway after reporting an 8% rise in underlying pre-tax profits to £390 million for the year to September 30.
Holidays targeted at couples and those looking for luxury all-inclusive resorts drove the record performance.
Shares were 9.1p higher at 278.1p, a rise of 3%.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article