THE FTSE failed to capitalise on the pound's continued plunging value on Tuesday, as the leading index was dragged down by uncertainty on European markets caused by the latest Donald Trump attack.

The FTSE 100 closed down 39.84 points, or 0.52%, at 7,646.77 but analysts pointed out that when the pound falls, the markets usually rise because it makes overseas earnings of UK-listed companies greater in sterling terms. Shares also become cheaper for dollar-denominated investors.

Connor Campbell, financial analyst at SpreadEx, said: "Though the FTSE was only down 0.6%, when the pound's continued slide is factored in, that's a pretty steep decline."

The pound was down 0.46% at 1.2162 against the dollar and down 0.51% against the euro at 1.0908.

Fiona Cincotta, senior market analyst at CityIndex, said: "Despite the positive open, the FTSE succumbed to the negative mood in the rest of Europe and on Nasdaq later in the day, on a mixture of concerns over the Fed rate cuts, US-China trade talks and in reaction to two major fallers that have weighed down the index."

The US president once again caused uncertainty across European markets, following a series of tweets saying "the problem with China, they just don't come through".

Mr Campbell said the comments were "not exactly the ideal tone to strike ahead of the week's negotiations in Shanghai".

He added: "Trump poured a tanker full of cold water on the embers of the market's trade optimism with, what else, a series of inflammatory tweets.

"Sparking fears that we could be back on the road to further trade war escalation, the European indices lost their heads."

The CAC plunged 2%, with the DAX also down 2% after poor results from airline Lufthansa.

At one point, the DAX hit a one-month low.

A barrel of Brent crude was up 0.71% at $64.16.

In company news, the FTSE 100 was helped by strong results from BP, making the oil and gas firm the biggest riser on the top index.

Shares closed up 16.2p at 543.2p after bosses posted a drop in half-year profits but delivered better-than-expected second-quarter earnings after higher production offset lower oil prices.

Greggs hailed the success of its latest menu additions as profits soared in the first half of the year by 52% to £36.7 million.

But investors were unimpressed, with shares falling 128.8p to 2,255.2p.

Household goods giant Reckitt Benckiser slashed its full-year sales outlook amid a slowdown in demand for baby formula in China.

Shares closed down 215p at 6,455p.

But the biggest faller was British Gas owner Centrica, which watched shares plunge 19%, or 17.26p, to 73.58p, after reporting a pre-tax loss of £446 million in the six months to June.

Chief executive Iain Conn also resigned.

Silver miner Fresnillo was the second biggest faller, after revealing revenues slumped 10% for the six months to June and gross profit fell 59%. Shares fell 141p to 653.6p.

The other biggest fallers were IAG, down 23.8p to 414.8p; Imperial Brands down 97.5p at 2,093p and British American Tobacco down 128p at 2,978p.

The biggest risers were BP; Micro Focus up 20.65p at 1,741.45p; JD Sports up 10.8p at 648.4p; Taylor Wimpey up 2.2p at 176.55p and Diageo up 36.5p at 3,448.5p.