THE London markets all sank as FTSE stocks were weighed down by the strengthening pound, which was buoyed by a surprise return to GDP growth.
The FTSE 100 closed 46.53 points lower at 7,235.81 on Monday.
The pound improved, denting internationally-focused stocks, after the Office for National Statistics said the economy grew by 0.3% in July, reducing the likelihood the UK will enter a recession.
Connor Campbell, financial analyst at Spreadex, said: "After a shaky start sterling rediscovered the spring in its step on Monday, aided by a surprisingly strong morning for UK data.
"Predictably the pound's recovery saw the FTSE move in the other direction. The UK index had quickly crossed 7,300 after the bell - a few hours later and it tumbled to a one-week low."
Sterling jumped against the dollar and the euro as currency traders were boosted by suggestions that MPs will prevent the Government from calling a snap election.
The pound was 0.71% up versus the US dollar at 1.236, and up 0.45% against the euro at 1.118.
The European markets were mixed, with the Dax rising to a six-week high as investors were more optimistic about Brexit, but the French markets edged lower.
The German Dax increased by 0.28% while the French Cac moved 0.31% lower.
The Dow Jones opened slightly higher on Monday, with stocks supported by expectations of an interest cut by the Federal Reserve next week.
In stocks, British Airways owner IAG saw shares nudge lower after Monday's flights were crippled as pilots launched a 48-hour strike in a dispute over pay.
Members of the British Airline Pilots Association (Balpa) are staging their first industrial action against the airline, grounding hundreds of flights.
Owner IAG saw shares slide by 6.6p to 423.5p as a result.
Elsewhere, Primark-owner Associated British Foods (ABF) saw shares fall after it said it expects to see margins hit by Brexit-related cost rises.
The finance boss at ABF said the company will take on the impact of a weak pound rather than pass price increases on to customers.
Shares in ABF closed down 49p at 2,305p at the close of play.
Eddie Stobart Logistics announced it could be taken over, less than a month after shares were suspended and the chief executive was shown the door.
Shopping centre giant Intu has seen shares surge higher on the back of reports that a private equity buyer could snap up the retail property group.
The company closed 3.82p higher at 40.32p on Monday.
The price of oil rallied after the Saudi energy minister said the pact to curb oil production could last "until death do us part".
The price of a barrel of Brent crude oil jumped by 1.78% to $62.76.
The biggest risers on the FTSE 100 were Aviva, up 10.4p at 374.4p, Carnival, up 88p at 3,603p, Royal Bank of Scotland, up 4.7p at 192.8p, and Prudential, up 35p at 1,439.5p.
The biggest fallers on the index were Rentokil, down 16.7p at 448.6p, AstraZeneca, down 251p at 7,004p, Coca-Cola HBC, down 96p at 2,715p, and London Stock Exchange Group, down 242p at 7,080p.
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 here