The London markets lost some of their recent steam as they closed in the red on the back of news that the economy shrank by 2% in the first quarter of 2020.

The Office for National Statistics (ONS) revealed activity plunged 5.8% in March in the biggest monthly fall since records began in 1997, putting the country on the path to a recession.

The FTSE 100 closed 90.72 points lower at 5,904.05p at the end of trading on Wednesday.

Connor Campbell, financial analyst at Spreadex, said the index could have seen a "far greater" decline, given the fall in GDP, but shared a lot of the pain with sterling during Wednesday's session.

The value of the pound slipped against both the euro and the dollar as currency traders swallowed the latest dramatic set of economic figures.

The value of the pound fell 0.3% versus the US dollar at 1.222 and was down 0.1% against the euro at 1.129.

Elsewhere in Europe, the major markets saw a sharper decline than the FTSE as traders continue to be dogged by fears over second coronavirus peaks across the continent.

David Madden, market analyst at CMC Markets UK, said: "The bullish run that equity markets enjoyed last month was largely down to a slowing of the infection rates as well as the reopening of industries.

"Now that some nations are slowly reopening sections of their economies, there have been increases in the rates of new cases, and that has spooked dealers."

The German Dax decreased by 2.56%, while the French Cac moved 2.85% lower.

Across the Atlantic, the Dow Jones opened in the red after Jerome Powell, the Fed chief, said that additional policy measures might be required to prevent lasting damage to the US economy.

Travel and aerospace firms had a disappointing trading session again, with cruise firm Carnival, British Airways owner IAG and Holiday Inn operator Intercontinental Hotels all falling.

It came after rival Tui said it is looking to cut up to 8,000 roles worldwide in response to the coronavirus crisis.

The UK's largest tour operator posted losses of 845.8 million euro (£747 million) in the first half of the current financial year. Shares in Tui slid by 4.3p to 260p.

Elsewhere in company news, Aston Martin tumbled lower after it revealed the number of vehicles it sold almost halved in the first three months of the year, compared to the same quarter in 2019.

Shares in the company closed 6.08p lower at 31.96p as it saw a testing period for the company continue.

Meanwhile, housebuilder Taylor Wimpey slumped despite announcing that its show homes and sales centres would start opening again from next Friday. Shares closed 3.95p lower 141.9p.

The price of oil pushed higher after the latest EIA report revealed that US oil inventories fell by 745,000 barrels.

The price of a barrel of Brent crude oil increased 0.07% to 29.56 US dollars.

The biggest risers on the FTSE 100 were Hikma, up 76p at 2,556p, Spirax-Sarco, up 204p at 9,466p, Ocado, up 44p at 2,100p, and GSK, up 35.2p at 1,742.2p.

The biggest fallers of the day were Carnival, down 101.2p at 838.2p, Melrose, down 8.44p at 83.6p, Intercontinental Hotel Group, down 298p at 3,152p, and Compass Group, down 102p at 1,146p.