The pound weakened 0.4% against the euro following the Bank of England governor Mark Carney's warning that wage growth is falling and the Brexit impact was unclear.
As a result, he said it was not the right time for interest rate hikes.
This supported the overseas earners on the FTSE 100 and helped the index move higher in early trading.
High street bank Barclays (BARC) was charged with fraud by the Serious Fraud Office in a case linked to Qatar.
Carney's comments also contributed to widespread weakness in the sector. Barclays nudged 0.1% lower to 206.5p, Lloyds (LLOY) fell 1% to 67.9p and HSBC (HSBA) retreated 0.3% to 689.5p.
Brent crude oil slumped 2% to $46 per barrel. Gold and copper were flat at $1,245 per ounce and $5,720 per tonne.
The US markets recovered from a tech sell-off last week as the tech heavy Nasdaq closed 1.4% higher at 6,239 on Monday.
Japan was the only market in Asia to finish on a high on Tuesday, up 0.8% at 20,230. Both the Hang Seng in Hong Kong and China's SSE Composite indexes nudged lower.
FTSE 100 RISERS AND FALLERS
Investors failed to warm to heating products supplier Wolseley's (WOS) latest results as weak growth in the UK concerned investors. The market overlooked a 6.6% rise in like-for-like sales growth as the stock remained unmoved at £48.88.
FTSE 250 RISERS AND FALLERS
A contract win failed to rally shares in defence business Ultra Electronics (ULE). The company announced an $18m contract for an undisclosed major surveillance and security system but the stock was up 1.6% to £20.88.
SMALL CAP RISERS AND FALLERS
Fashion retailer N Brown Group (BWNG) was in the spotlight as sales from ladies wear rose by 13.5% on a year-on-year basis. Shares in the company rallied 6.2% to 302.5p.
Elsewhere in the support services sector, Interserve (IRV) won a £265m contract extension with the UK Armed Forces, although it was met with a muted response as the stock was up only 1.8% to 242.5p.
It was a good day for patent search firm RWS (RWS) thanks to strong sales growth in the six months to 31 March 2017. Revenue over this period increased 35% to £76.6m and the company moved into the life sciences space through the acquisition of Luz in February.