So-called cyclical stocks led losses after U.S. Senate Majority Leader Harry Reid said there had been little progress among lawmakers in negotiations to avoid a 'fiscal cliff' of spending cuts and tax hikes that could tip the world's largest economy into recession.

Reid's comments weighed on U.S. shares late on Tuesday, with the Standard & Poor's 500 index, widely regarded as a global benchmark for equities, recording its worst day in eight sessions as it fell 0.5 percent to finish at 1,398.94.

Reid's comments came after the Organisation for Economic Co-operation and Development downgraded its global growth outlook. That weighed on basic materials stocks, which are dependent on global growth, and gave impetus to profit-taking on gains made following the successful conclusion on Monday of talks among Greece's international lenders.

If you look at the worst performing sector this morning, it is the basic materials sector, and that's off the back of these lower growth expectations globally, said James Butterfill, global equity strategist at Coutts.

At 1130 GMT, Britain's FTSE 100 was down 15.11 points, or 0.3 percent at 5,784.60 points, with two big cyclical sectors - financials and materials - combining to take 11 points off the index.

Consumer staples also suffered, despite their usual status as a safe play during economic uncertainty, taking 3.7 points off British blue-chips.

The staples have been a massive outperformer all year, they're at five-plus-year highs, and they've been a great hiding-place, because you've had some growth there, said Nick Xanders, head of European equity strategy at brokerage BTIG.

But these things are now trading on very high multiples. So you need these things to carry on growing, and that could be an issue. Some of the beverage names have been making acquisitions to keep growing, but there's only so much growth you can buy.

Some defensive stocks did benefit from the cyclical sell-off however, with shares in United Utilities among the FTSE 100 leaders. They rose 2 percent after the multi-utility posted a rise in first-half revenues and said it was on track to meet regulatory outperformance targets.

Volume was thin, at just 22 percent of the average 90-day volume, and the profit taking saw the FTSE remain in a range of between 5,600 and 5,900 that has persisted since August.

A resolution to the fiscal cliff, which will come into effect in January if no deal is done, is seen as key to boosting both equity prices and volumes.

We're seeing short positions coming on board with a view to closing at 5,600, TJ Markets head of trading Manoj Ladwa said.