Sharecast - At 0820 BST, the FTSE 100 was 0.1% lower at 7,517.17, while sterling was down 0.3% against the dollar at 1.2459.
Figures released earlier by the Office for National Statistics showed the economy contracted more than expected in July as strikes and poor weather took their toll.
GDP shrank 0.5% following 0.5% growth in June, and versus consensus expectations of a 0.2% decline.
Services output fell 0.5% following 0.2% growth in June, and was the main contributor to the fall in GDP in July.
Meanwhile, production output was down 0.7% in July following 1.8% growth the month before, and output in the construction sector declined 0.5% after growth of 1.6% in June.
ONS director of economic statistics Darren Morgan said: "In July, industrial action by healthcare workers and teachers negatively impacted services and it was a weaker month for construction and retail due to the poor weather.
"Manufacturing also fell back following its rebound from the effect of May's extra Bank Holiday.
"A busy schedule of sporting events and increased theme park visits provided a slight boost."
Paul Dales, chief UK economist at Capital Economics, said: "The 0.5% m/m fall in real GDP in July…could possibly mean that the mild recession we have been expecting has begun. Even so, with wage growth still uncomfortably strong, we suspect the Bank of England will still raise interest rates one final time next week, from 5.25% to 5.50%."
Market participants were also looking ahead to the US consumer price index for August, due out at 1330 BST.
Richard Hunter, head of markets at Interactive Investor, said investors were "on edge in anticipating the latest US inflation reading".
"Complicating the inflationary and therefore interest rate issue was a further hike in oil prices, which have now risen by over 7% in the year so far. The latest development saw OPEC maintaining a strong demand forecast in the immediate future, while traders tried to estimate whether the floods in Libya would have any meaningful effects on disrupting supply," he said.
"The more recent strength in energy prices is likely to have had an effect on the key inflation data expected this week, with the consumer price index reading today and the producer price index tomorrow. There seems little doubt that the general downward trajectory of inflation is slowly being achieved, but the oil price rises could cloud the issue and, at worst, steer the Federal Reserve towards considering that its interest rate hiking cycle has further to go."
In equity markets, BP (LON:BP) was trading down as it announced late on Tuesday that chief executive Bernard Looney has resigned after failing to fully disclose details of past relationships with colleagues.
Insurer Aviva (LON:AV) was the standout gainer on the FTSE 100 after agreeing to sell its 25.9% stake in Singapore Life Holdings (Singlife), together with two debt instruments, to Sumitomo Life for £800m in cash.
Housebuilder Redrow (LON:RDW) was little changed as it said weekly sales over the summer had almost halved due to rising mortgage costs amid a "challenging" market and revealed a fall in full year profits.
Market Movers
FTSE 100 (UKX) 7,517.17 -0.14%
FTSE 250 (MCX) 18,511.22 -0.17%
techMARK (TASX) 4,332.99 -0.15%
FTSE 100 - Risers
Aviva (AV.) 387.60p 3.00%
HSBC Holdings (LON:HSBA) 603.80p 1.09%
Frasers Group (FRAS) 814.00p 1.06%
Pearson (LON:PSON) 885.80p 1.00%
Berkeley Group Holdings (The) (BKG) 4,029.00p 0.70%
Airtel Africa (AAF) 118.80p 0.68%
Vodafone Group (LON:VOD) 77.90p 0.67%
Phoenix Group Holdings (PHNX) 523.80p 0.65%
NATWEST GROUP (NWG) 231.50p 0.65%
Barclays (LON:BARC) 154.48p 0.59%
FTSE 100 - Fallers
Haleon (LON:HLN) 317.75p -1.91%
Ocado Group (LON:OCDO) 786.40p -1.90%
Smurfit Kappa Group (CDI) (LON:SKG) 2,716.00p -1.88%
BP (BP.) 514.80p -1.53%
Flutter Entertainment (CDI) (FLTR) 13,980.00p -1.38%
Abrdn (ABDN) 156.05p -1.27%
JD Sports Fashion (JD.) 138.70p -1.25%
Reckitt Benckiser Group (RKT) 5,708.00p -1.18%
Ashtead Group (LON:AHT) 5,060.00p -1.02%
Next (NXT) 7,218.00p -0.82%
FTSE 250 - Risers
NCC Group (NCC) 98.00p 3.48%
Dunelm Group (LON:DNLM) 1,161.00p 2.56%
Marks & Spencer Group (MKS (LON:MKS)) 227.80p 2.29%
SSP Group (SSPG) 237.40p 2.15%
Britvic (LON:BVIC) 899.00p 1.99%
Liontrust Asset Management (LON:LIO) 621.00p 1.80%
IWG (LON:IWG) 169.80p 1.74%
4Imprint Group (FOUR) 5,100.00p 1.19%
Dr. Martens (DOCS) 152.20p 1.00%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 470.00p 0.97%
FTSE 250 - Fallers
Petershill Partners (PHLL) 146.60p -4.31%
Capita (CPI) 16.41p -3.01%
Barr (A.G.) (BAG) 485.00p -2.81%
Discoverie Group (DSCV) 720.00p -2.44%
Energean (ENOG) 1,129.00p -2.25%
Rathbones Group (RAT) 1,694.00p -2.19%
Playtech (LON:PTEC) 488.00p -2.17%
Renishaw (LON:RSW) 3,528.00p -2.05%
Ferrexpo (LON:FXPO) 76.70p -1.98%
Safestore Holdings (SAFE) 778.50p -1.95%