The positive mood on Monday petered out by Tuesday as markets pulled back from the earlier pile on.
The FTSE 100 closed the day down 46.36 points, or 0.8%, at 6,002.23 on Tuesday – following a 4.3% jump a day earlier.
Caution came as Chancellor Rishi Sunak told a select committee it was “not obvious” the economy will bounce back from the coronavirus crisis.
It came as Senators in the US heard from Federal Reserve chairman Jerome Powell and Treasury Secretary Steve Mnuchin at an evidence session.
Mr Mnuchin warned the US could face “permanent damage” to the economy the longer lockdown goes on.
And Mr Powell said the central bank will keep interest rates at near-zero until it is “confident” the economy is in recovery with unemployment down.
Markets in Europe slowed up their gains too, with the Cac 40 in Paris down 0.9% and Dax 30 in Frankfurt down 0.2%.
David Madden, market analyst at CMC Markets, said: “In the past 24 hours, the outlook hasn’t really changed, but equities have handed back some of the ground that was made yesterday.
“Economies around the globe are still being reopened, and hopes remain high for a potential Covid-19 vaccine, but it seems like the bulls have decided to take a breather.”
The pound was up 0.5% against the dollar at 1.225 dollars and up 0.3% against the euro at 1.121 euros.
Brent oil slipped backed to 34.56 dollars, from 35.48 dollars on Monday evenings.
In company news, Imperial Brands fell 107.5p to 1545.5p as the tobacco and vape firm cut its dividend and warned on the impact of Covid-19.
Bosses warned that the Covid-19 pandemic is expected to have a “more pronounced” impact in the second half of the financial year, than the first.
EasyJet shares fell just 4.4p to 547.2p, with investors unconcerned at the hacking of details for nine million passengers.
The Luton-based carrier said the figure includes 2,208 customers who had their credit card details exposed.
Catering giant Compass launched a bid to raise £2 billion equity to shore up its balance sheet as it warned of a “profound impact” from the coronavirus pandemic.
The world’s largest catering group said the proceeds from the mammoth share placing would help it weather the crisis, but shareholders were less impressed, with shares closing down 39.5p at 1,114p.
Sandwich maker Greencore saw shares plunge 10.8p, or 7.15%, to 140.3p after reporting a drop in demand over the past six weeks.
Weekly demand in its food-to-go categories fell by as much as 70%, although this has recovered slightly.
And retailer French Connection warned it could run out of cash within months if it is not able to raise funds from its banks.
The company said it had struggled to access Government loan schemes designed to prop up ailing businesses, blaming “tight” constraints on which firms qualify. Shares closed at 5.725p.
The biggest risers on the FTSE 100 were IAG, up 15.35p to 203.5p, Standard Life Aberdeen, up 11.7p to 233.3p, ITV, up 2.52p to 76.5p, M&G, up 3.7p to 121.45p, and JD Sports, up 16.6p to 562p.
The biggest fallers on the FTSE 100 were Imperial Brands , down 107.5p to 1,545.5p, Centrica, down 2.14p to 37.22p, SSE, down 61.5p to 1,223.5p, Compass Group, down 39.5p to 1,114p, and Next, down 121p to 4,478p.