Profit taking saw the FTSE 100 fall 1.3% to 5316.22 points this morning, negating some of its 5.2% rise on Monday.
Banks, which made sizeable gains on Monday, were among the fallers today as traders took quick profits.
By 8.45am, Royal Bank of Scotland, which rose 10.4% yesterday, was 4.2% off at 49.5p.
Miners also fell after China's inflation rate hit 2.8% in April year on year, an 18-month high, and its property prices jumped 12.8%, fuelling concerns of Beijing tightening.
Xstrata was down 3.9% at £10.50, Kazakhmys fell 2.8% to £12.88 and Rio Tinto was 3.2% lower at £32.59.
Among the risers, Aviva rose 0.4% to 340.2p after revenue from first quarter sales of life insurance and pensions fell, but still beat analysts' expectations.
Security firm G4S was up 1% at 266.7p on rumours US private equity house Kohlberg Kravis & Roberts could mount a £5.3bn bid for it.
BT Group rose 1% to 117.5p. The telecom groups was upgraded to 'hold' by Standard & Poor's yesterdays, and to 'buy' by AlphaValue.
Today, all eyes will be on the UK's industrial production figures for March - 0.3% growth is forecast month on month and 0.5% year on year - and on manufacturing output where growth of 0.3% and 1.5% are the corresponding expectations.
Overnight in the US, the Dow Jones closed up 3.9% at 10,785.14 points - its biggest gain in over a year - buoyed by euphoria over yesterday's €720bn bailout offer for troubled eurozone nations.
The Nasdaq and S&P 500 also posted their best gains in over 12 months.
Last week had erased US markets' gains for 2010, but yesterday left the S&P up 4% since 1 January.
Exxon Mobile gained 2.4% to $65.23 yesterday as a weakening dollar boosted crude oil by more than 2%.
Elsewhere, Caterpillar rose 7.4% and Boeing ended 6.4% higher at $71.
Asian stocks fell on China's inflation news.
Japan's Nikkei 225 benchmark index dropped 1.1% to 10,411.1 points while the Hang Seng shed 2% to close at 20,017.38.
However, Sony rose 0.3% to 3090 yen after its preliminary full year earnings statement forecast a loss 41% smaller than analysts predicted.
