However, downside was being limited early on as investors gave a positive reaction to corporate earnings from the likes of Ladbrokes, Just Eat, Serco and SIG.

London’s benchmark FTSE 100 was trading 0.2% lower at 6,622 in early trading.

The index advanced 1% on Monday on the back of improved newsflow from Iraq, Gaza and Ukraine. In particular, investors welcomed the news of Russia stopping military exercises near the eastern border of Ukraine over the weekend.

Ukraine and Russia are now said to have agreed on a Red Cross-led humanitarian aid mission in Luhansk, where thousands of people are without access to water, power and medical help. However, there were conflicting reports that said that the Red Cross was still waiting for information about the contents of a Russian convoy before agreeing to a mission.

Meanwhile, with Ukrainian officials claiming that up to 45,000 Russian troops remain close to the frontier, tensions between the neighbouring nations are still high with developments having the potential to spark volatile moves on financial markets.

On the macro calender on Tuesday, traders will be keeping a close eye on the ZEW surveys in Germany which are expected to show that confidence has dipped this month. The headline economic sentiment index, which surveys financial experts, is forecast to fall to 17 from 27.1 in July.

Ladbrokes, Just Eat, Serco and SIG rise

High street bookie Ladbrokes was a high riser early on after saying it delivered on its key operational objectives in the first six months of 2014, as a good World Cup performance pushed revenues higher 4% to £589.3m. However, profits fell by nearly 50% as a result of “industry-wide customer-friendly results, notably in football in January and horse racing in June”, the company said.

Online takeaway marketplace Just Eat said profits trebled in the first half of 2014 on the back of strong demand and accelerating growth in mobile. The company said pre-tax profit was up 200% at £6m on revenues that jumped by 58% to £69.8m, causing shares to surge in morning trade.

Support services group Serco was also making gains despite reporting “poor” first-half trading and predicted challenges ahead. Investors, however, welcomed the news that it had reduced net debt and appointed a new finance chief.

Building product distributor SIG rose as the company forecast better-than-expected annual profits on the back of the buoyant UK housing market, though it said trading in France was still tough.

RSA Insurance was also in demand on Tuesday after Credit Suisse upgraded the stock from ‘underperform’ to ‘neutral’, saying that the stock’s valuation is not demanding.

Leading the fallers was financial services group Hargreaves Lansdown after UBS initiated coverage of the stock with a ‘sell’ rating, saying that the “risk-reward [is] significantly skewed to the downside”.

Utility stocks were providing a drag on the markets this morning with Centrica and National Grid among the worst performers.

FTSE 100 – Risers
Barclays (BARC) 217.90p +0.76%
TUI Travel (TT.) 362.90p +0.67%
RSA Insurance Group (RSA) 427.80p +0.52%
Bunzl (BNZL) 1,614.00p +0.50%
Glencore (GLEN) 375.35p +0.47%
International Consolidated Airlines Group SA (CDI) (IAG) 332.50p +0.39%
Persimmon (PSN) 1,277.00p +0.39%
HSBC Holdings (HSBA) 627.90p +0.32%
Carnival (CCL) 2,198.00p +0.32%
Sports Direct International (SPD) 664.00p +0.30%

FTSE 100 – Fallers
Hargreaves Lansdown (HL.) 1,040.00p -3.79%
Shire Plc (SHP) 4,711.00p -1.11%
United Utilities Group (UU.) 835.50p -1.07%
National Grid (NG.) 845.00p -1.05%
Ashtead Group (AHT) 899.00p -0.83%
SSE (SSE) 1,450.00p -0.82%
Tesco (TSCO) 244.30p -0.81%
Severn Trent (SVT) 1,871.00p -0.80%
Travis Perkins (TPK) 1,690.00p -0.76%
Centrica (CNA) 305.50p -0.75%