The pound made gains on Tuesday as investors reacted to news that the sixth round of Brexit talks would take place next week, giving hope of a potential deal between the UK and EU.
Sterling rose nearly 0.5% against both the US dollar and euro to trade at 1.327 and 1.139, respectively.
The currency's gains weighed on the FTSE 100, which ended the day up just 0.07% or 5.27 points at 7,493.08 points.
Listed multinational firms on the blue chip index tend to benefit when foreign currencies are stronger than the pound.
However, the FTSE 100 has clocked a 1.6% rise for October, marking its biggest monthly gain since May when it rose 4.39%.
The UK currency - which had already been trading higher after the EU's chief negotiator, Michel Barnier, signalled that the two sides were arranging the next round of talks - received an added extra boost after UK Brexit Secretary David Davis confirmed that negotiations would take place next week.
David Madden, a market analyst at CMC Markets UK, said: "This gave sterling traders some optimism as it moves along the post-Brexit deal possibility."
Mr Davis said he was seeking an "intensification" of negotiations, but assured the House of Lords EU Committee that Britain was "on timetable" to achieve its desired outcome by the scheduled date of withdrawal from the EU in March 2019.
Across Europe, the French Cac 40 ended higher by 0.18%, while the German Dax was closed for Reformation Day.
Brent crude prices were hovering near their highest level since June 2015, as investors awaited data from the American Petroleum Institute which would outline energy stockpiles across the US.
In UK stocks, Burberry shares fell 20p to 1,902p.
It came as the fashion house confirmed that president Christopher Bailey will step down from the board next year, ending his 17-year stint at the high-end fashion house.
BP shares climbed 3% to a seven-year high during morning trading, but ended the day up just 1.7% or 8.6p at 510.2p.
Investors were reacting to third quarter earnings results which showed that profits more than doubled in the third quarter to $1.9 billion (£1.44 billion) amid a 14% jump in oil and gas production.
WPP was among the biggest risers, up 39p at 1,334p, despite having rolled back annual revenue targets, and warning that advertising spending was suffering as activist investors pressured firms to cut costs.
The advertising giant said like-for-like revenue and net sales for the full year would now come in broadly flat.
Away from the top tier index, Just Eat was one of the biggest risers on the FTSE 250.
The takeaway firm's shares rose 40p to 780p after lifting its annual revenue guidance from £500 million to £515 million to between £515 million and £530 million, having booked revenues of £138.6 million for the three months ending in September, up from £94.5 million last year.
The move was largely driven by the "continued strength" of its Canadian-based SkipTheDishes business, which it snapped up in December last year
The biggest risers on the FTSE 100 were Croda International up 170p to 4,184p, easyJet up 41p to 1,339p, Segro up 16p to 543p, and WPP up 39p to 1,334p.
The biggest fallers on the FTSE 100 were Fresnillo down 35p to 1,302p, Imperial Brands down 70p to 3,070.5p, Glencore down 7p to 363p, and Randgold Resources down 135p to 7,395p.
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