The benchmark FTSE lost 0.5% to end at 6,830.50 after closing at the highest level since 1999 on Monday.
HSBC Holdings PLC dropped 1.4% after Citigroup cut the heavyweight bank to neutral from buy following the company’s disappointing earnings report.
The Citi analysts said they struggle to see positive catalysts for HSBC for the next 12 months, but that the shares could be attractive and offer higher margins in the longer term.
Mining firms also weighed on the London benchmark on Tuesday, as most metals prices dropped. Miners had dropped on Monday on the news of Chinese tightening the property market.