The FTSE 100 index dipped 0.4pc by 0755 GMT, with Mondi and its rivals DS Smith and Smurfit Kappa falling 2.8pc-4.5pc, after Mondi reported a plunge in core earnings due to lower sales volumes and pricing pressure.
Homewares retailer Dunelm slid 5.3pc, after it flagged a softer market, which partly led to 0.3pc dip in the FTSE 250.
After starting on the front foot on hopes that trade talks scheduled for tomorrow and Friday would yield a breakthrough, a report that Beijing has urged Washington to stop unreasonable pressure on Chinese companies dragged the main index in to the red.
A report that the U.S. was mulling a currency agreement with China as part of a partial deal that could see a planned tariff hike next week being cancelled had offered some respite to markets, though a separate report said there was lack of progress in deputy-level talks held this week.
"Ultimately, goodwill gestures are great but it doesn't resolve the deep divides that clearly exist on certain issues, which makes a deal in the foreseeable future unlikely," Oanda analyst Craig Erlam said.
Amidst the trade angst and Brexit worries, the FTSE 100 formed a "Death Cross" pattern as its 50-day moving average (DMA) crossed below the 200 DMA, a technical pattern that is a warning sign that more losses are likely in the near term.
The blue-chip bourse last formed the pattern roughly a year ago when Brexit negotiations and Italy's budget deficit had hit risk appetite.
"The ebb and flow of sentiment around US, China trade continues to pull global stock markets from pillar to post," CMC Markets' Michael Hewson wrote.
Spirits company Diageo, British American Tobacco and consumer goods firm Unilever, all of whom book a major part of their earnings in the U.S. dollar, weakened as sterling recovered.
However, luxury brand Burberry added 1.3pc following French rival LVMH's robust quarterly results despite the Hong Kong protests.
Housebuilders edged higher, led by a 1.1pc gain in Taylor Wimpey, after a survey showed that a key headline house price index figure rose to a three-month high in August, even as broader uncertainties remain.
Small-cap fashion retailer N Brown jumped 7pc after a profit beat.