London's FTSE 100 dipped on Wednesday as a worsening COVID-19 pandemic dulled optimism around a swift economic recovery, while Melrose Industries slumped to two-month lows after booking a quarterly loss.

Turnaround specialist Melrose tumbled 16.7pc to the bottom of the FTSE 100 as it signalled it could cut jobs to combat the coronavirus-led downturn.

The blue-chip FTSE 100 was down 0.5pc, tracking declines in Europe with global coronavirus cases surging past 15 million. Financial, energy and industrial stocks were among the biggest drags on the index.

The mid-cap FTSE 250 was flat with gains for tech and healthcare firms offset by declines in consumer discretionary and real estate stocks.

Bank stocks fell more than 1pc, tracking new lows in UK government bond yields.

"It's a pause before you find out what's next around the corner (and eyes are now on) the United States to get some sort of extra stimulus package for that next leg higher," said David Madden, analyst at CMC Markets in London.

The FTSE 100 has rebounded sharply from a coronavirus-driven crash in March, but gains have slowed since May with the export-laden index struggling to rise for more than three days in a row as the spike in global cases raises fears of another round of lockdowns.

A Reuters poll found Britain's economy is expected to expand at its quickest pace in decades in the third quarter following a record plunge in the previous quarter, but a majority of the respondents said the outlook had not improved.

Expectations for second-quarter corporate profits in Europe have also deteriorated, according to Refinitiv data.

In domestic earnings-driven news, home improvement retailer Kingfisher jumped 10pc to its highest in more than a year as it forecast a rise in underlying first-half profit.