By Johann M Cherian and Shashwat Chauhan
(Reuters) -British equities fell on Tuesday as uncertainties surrounding a U.S. debt ceiling deal dented sentiment, while Burberry slipped, tracking wider declines across European luxury stocks.
The FTSE 100 fell 0.1%, down after three sessions in the green, while the FTSE 250 midcap index lost 0.3%.
White House and congressional Republican negotiators will meet again to resolve a months-long impasse over raising the U.S. government's $31.4 trillion debt ceiling.
Republican debt ceiling negotiating representative Garret Graves said his party and the White House remained far apart after talks on Monday night, but negotiations were to resume later on Tuesday.
"The uncertainty certainly has not passed," said Steve Sosnick, chief strategist at Interactive Brokers.
"Sentiment will remain fragile until a lasting deal is passed by both houses of Congress and signed by the President."
Burberry Group (LON:BRBY) fell 3.1% with luxury stocks across Europe declining as investors took profit amid concerns over weakening demand in the United States after a stellar run by the sector.
Industrial metal miners slipped 1.2% as copper prices touched a near six-month low. [MET/L]
Performance of UK equities has been largely lacklustre since late April, with multiple factors - including mixed corporate results and the U.S. debt deal impasse - clouding investors' mood.
A preliminary reading of the S&P Global/CIPS UK Purchasing Managers' Index (PMI) showed companies in Britain's services sector increased prices at a rapid pace in May as they saw another month of strong demand.
"With the services economy making up 80% of UK GDP, recession fears, at least for second half of 2023, continue to fade," said Sanjay Raja, chief UK economist at Deutsche Bank (ETR:DBKGn) Research.
The International Monetary Fund also said it no longer expects a recession in Britain this year.
Market researcher Kantar said domestic grocery inflation eased slightly for the second-straight month in May. UK retailers fell 1.0%.