Airlines and travel firms suffered heavy falls after a profits warning from low-cost carrier Ryanair sent ripples through the wider sector.
The London market struggled for momentum as ongoing concerns over the prospect of military intervention in Syria also weighed on sentiment.
The FTSE 100 Index advanced just 6.3 points to 6474.7 and other European markets struggled to make headway after two senior Republicans gave a major boost to President Obama's hopes of getting approval for a military strike.
London's decline came despite more encouraging news on the UK economy, with new figures showing that the powerhouse services sector accelerated at its fastest pace for more than six years in August.
That completed a hat-trick of upbeat data on the economy, after positive surveys from Britain's factories and building sites in recent days.
The pound gained strongly on the dollar to 1.56 and also advanced on the euro to 1.18.
But traders' attention turned to the travel sector after Ryanair's warning over headwinds this winter, including from greater competition and the impact of Europe's ongoing economic crisis.
It will axe some services and has cut its passenger target for this financial year from 81.5 million to just under 81 million, meaning its profits will be towards the bottom end of its current guidance.
Dublin-listed Ryanair's shares were 11% lower, while rival easyJet was the biggest faller in London's top flight, off 5.1% or 65p to 1215p.
British Airways parent company International Airlines Group fell 3.7p to 291p and Thomson Holidays owner TUI Travel declined 11.1p to 334.6p. Outside the top flight, Thomas Cook was down 6.9p to 135.7p or 4.8%.
Other big fallers included financial services firm Hargreaves Lansdown, even though it posted a 28% rise in full-year profits and said active client numbers were at a record level. Shares dipped 17p to 1014p as investors booked profits following a strong run for the Bristol-based company.
Meanwhile, Vodafone shares continued to see-saw in the wake of Monday's £84 billion deal to sell a 45% stake in Verizon Wireless.
The heavyweight stock, which declined yesterday after a week of big rises, was back in positive territory, up 4.5p to 207p, making it the biggest top tier climber.
Other companies on the risers board included Costa owner Whitbread, which added 20p to 3138p ahead of a trading update next week.
Shares in Argos and Homebase owner Home Retail Group edged up 0.9p to 145.2p after the company announced that chief executive Terry Duddy will leave the company by next July.
He took the helm of Argos in 1998 after mail order retailer GUS, Home Retail's predecessor, bought the catalogue business for £1.9 billion.
The biggest risers on the FTSE 100 were Vodafone up 4.5p to 207p, BG Group 24p higher to 1271p, Johnson Matthey 54p firmer to 2972p and Petrofac up 22p to 1418p
The biggest fallers on the FTSE 100 were easyJet down 65p to 1215p, Resolution 10.6p lower to 314.8p, TUI Travel down 11.1p to 334.6p and Associated British Foods off 60p to 1841p.