The FTSE 100 lost ground as the pound surged after Theresa May's speech on Brexit.
The FTSE 100 index was down 106.75 points, closing at 7220.38 - 1.46% lower - as traders processed details of Theresa May's speech.
This marked its steepest fall since June 27 last year, when it fell 2.55%.
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Former chancellor Lord Lamont praised Theresa May's Brexit speech, saying the prime minister has given "all the detail that could reasonably be expected".
He added that it is time for everyone to "back the prime minister's efforts."
Speaking to the Press Association, Lord Lamont said: "The Prime Minister has given a firm lead and a clear vision. She has given all the detail that could reasonably be expected.
"Carping or calling for yet more detail will merely undermine Britain's negotiating position. It is time for everyone to back the Prime Minister's efforts."
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The government's plan for Brexit is "at least more realistic", Donald Tusk, the European Council president, has said.
Mr Tusk said the EU's remaining 27 members were "united and ready to negotiate" with Britain.
Nicola Sturgeon has said Scotland must have the ability to choose its own future if attempts at a compromise over Brexit are rejected.
The SNP leader said she had seen no evidence so far that Scotland was being listened to and that the government could not take Scotland out of the EU and the single market without it having the ability to choose a different future.
Ms Sturgeon's comments came as Prime Minister Theresa May outlined the government's programme for Brexit, including pulling out of the single market.
Scotland overwhelmingly voted to remain in the EU during the referendum on European Union membership last year and the Scottish government has since made clear it wants to remain in the single market.
It seems the Westminster Tory government now think they can do anything to Scotland and get away with it. They must start to understand how wrong they are.
The UK government cannot be allowed to take us out of the EU and the single market, regardless of the impact on our economy, jobs, living standards and out reputation as an open, tolerant country, without Scotland having the ability to choose between that and a different future.
ITV News' Business Editor Joel Hills was in the City of London to see how the City responded to Theresa May's big Brexit speech.
"The pound has become a benchmark of confidence in Britain's economy, and it is on course for its highest rise since 2008," he said.
"Import costs as a result are starting to rise here, inflation, we learned today, has risen to its highest level in two years.
"The suggestion is that there will be a squeeze in living standards. People are going to start feeling it soon."
He said businesses will like that the prime minister has promised that the "brightest and the best" will be welcome to the country, but firms employing low-skilled workers may miss out.
He added: "The prime minister's committed to tariff free, tax free, quota free ongoing access to the European Union and its economies, but that will come at a price, and she did not spell out what price she is willing to pay."
Brexit minister David Davis gave further details to Parliament about the Government's plan following Theresa May's speech on Tuesday morning.
You can watch back his comments here or on the ITV News Facebook page:
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