Michael Hewson at CMC Markets said: "With the Fed extending its emergency lending programs until the end of the year yesterday, in a sign that they are extremely concerned about how the US economy is doing.
"The FOMC is also likely to have concerns that the recent recovery seen in the US economy may well be starting to falter in the face of a surge in coronavirus cases, not only across the sunbelt states of the US, but across the country more broadly.
"We’ve already heard mutterings around a concern that a lack of inflation, as well as widespread business defaults could hamper any economic rebound in the weeks and months ahead.
"A willingness to be more relaxed about its long-term goals regarding its inflation guidance could be the type of monetary policy change which would send an even stronger signal that rates were likely to remain lower for longer, especially since politicians in Washington continue to bicker about the size of any next stimulus package."
Medical products maker Smith+Nephew tumbled 4.2% as it posted a lower-than-expected first-half profit, while homebuilder Taylor Wimpey shed 7.7% on saying it expected to complete around 40% fewer homes in 2020.
Lloyd’s of London insurer Lancashire fell 4.6% to the bottom of the FTSE 250 after posting a loss for the first half of the year.
But sentiment remained cautious after a resurgence of Covid-19 cases in Xinjiang in China, Hong Kong, and Australia, as well as spikes in Spain and Belgium, along with other localised outbreaks across Europe has put into question further lockdown relaxation measures.
The uncertainty around the globe has caused investors to head for gold, hitting $2000 for the first time this week.
