STERLING slumped on Tuesday as traders took a dim view of comments from Downing Street saying Britain was seeking a more ambitious European trade agreement than the EU-Canada deal.

The pound was down 0.2 per cent versus the US dollar at 1.33 and 0.5 per cent lower against the euro at 1.129, as the UK currency also suffered in the wake of negative comments about the City of London from the European Commission's chief negotiator, Michel Barnier.

Mr Barnier told a raft of European newspapers that there would be no special arrangement to allow City firms to trade freely in the EU if Britain leaves the single market.

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"There is no place (for financial services)," he said. "There is not a single trade agreement that is open to financial services. It doesn't exist."

Describing the position as a result of "the red lines that the British have chosen themselves", he stated: "In leaving the single market, they lose the financial services passport."

In contrast, the FTSE 100 Index closed up 7.08 points to 7,544.09, with pharmaceuticals giant Shire leading the charge on the top tier, climbing 143p to 3,920p.

David Madden, market analyst at CMC Markets, said: "Traders are cautious when it comes to all things Brexit related, and until solid progress is made between the two sides, sterling could struggle to drive higher."

The price of oil rose 0.3 per cent to $63.62 a barrel, boosted by Opec supply cuts and the Forties North Sea pipeline remaining offline.

In UK stocks, Old Mutual was enjoying a strong session as it struck a deal to sell its single strategy asset management arm to private equity outfit TA Associates for £600 million.

The unit has £35.7 billion funds under management and booked pre-tax profit of £60m last year.

Under the terms of the deal, Old Mutual will receive £570m in cash up front and a further £30m from 2019 to 2021, with the business transferred to TA Associates in January.

The majority of the current management team of the single strategy business, including chief executive Richard Buxton, will remain in place.

Shares were up 5.7p to 218.8p.

No-frills carrier easyJet was also sitting among the biggest risers after confirming its acquisition of part of bankrupt German carrier Air Berlin on Monday.

The €40m (£35.2m) deal will see the budget airline take control of Air Berlin's operations at the capital's Tegel Airport, with easyJet leasing 25 of its aircraft.

The agreement also includes easyJet taking over landing slots and offering employment to the defunct carrier's flying crew.

Shares closed up 39p to 1,416p.

Away from the top tier, Koovs tanked after the fast fashion retailer warned sales would fail to hit annual targets.

The London-listed firm closed down 42 per cent - or 11.5p to 15.5p - as investors took flight when the India-focused company said full-year sales for 2018 had come under pressure following a significant drop in marketing expenditure.

The biggest risers on the FTSE 100 Index are Shire up 143p to 3,920p, easyJet up 39p to 1,416p, Carnival up 137p to 4,982p, Old Mutual up 5.7p to 218.8p.

The biggest fallers were Mediclinic International down 29p to 579p, Fresnillo down 37p to 1,326p, Micro Focus International down 44p to 2,485p, Associated British Foods down 48p to 2,814p.