The blue-chip FTSE 100 was down 0.7% and the mid-cap FTSE 250 was 0.6% lower.

Data showed Chinese retail sales were down 1.8% last month despite a pickup in second-quarter economic growth, pointing to a weakened consumer story in the world's second largest economy.

Ladbrokes owner GVC Holdings was among the worst performers on the FTSE 100 after it said long-time Chief Executive Kenny Alexander was retiring.

Recruiter Hays slipped 1.3% as it warned of lower annual profits amid a slump in fee income. While data showed some improvement in the British job market last month, analysts posited a grim outlook due to the pandemic.

"Nearly all of Hays' territories have seen net fee income drop in the order of 30% bar the US, which is a little better, and the UK and Ireland, which are markedly worse," Russ Mould, investment director at AJ Bell wrote in a note to clients.

"This is not an encouraging portent for a brewing unemployment crisis in Britain - even if there were some modestly more encouraging signs in the latest jobs data."

In other earnings news, Anglo American shed 1.2% after posting an 18% decline in overall second-quarter output. Global miner Rio Tinto traded flat ahead of its quarterly production results on Friday.

Power generator SSE Plc bucked the trend, closing more than 2% higher after it said it will maintain its dividend schedule despite the coronavirus.

A raft of global stimulus moves helped the FTSE 100 rally about 27% from its March lows, but it is still down about 17% on the year and has trailed its European and Wall Street peers as economic data points to a slower-than-expected rebound from the pandemic

(Reporting by Shashank Nayar in Bengaluru; Additional reporting by Sagarika Jaisinghani; Editing by Subhranshu Sahu and Frances Kerry)

By Shashank Nayar and Ambar Warrick