The FTSE 100 fell into the red on Wednesday, weighed down by a stronger pound and a drop in Standard Chartered shares as investors lamented the bank's decision to withhold a shareholder dividend.

London's blue chip index closed lower by 0.16% or 12.23 points at 7,411.43, with Standard Chartered shares dropping 6% or 51.2p to 795p.

It comes despite a 93% leap in half-year profits, thanks to restructuring efforts, with investors lamenting news the bank would not resume dividend payouts amid "regulatory uncertainties."

The group said it would review its dividend policy at the end of the year.

David Madden, a market analyst at CMC Markets UK, said: "A lack of a dividend pushed shares in Standard Chartered lower today despite a good set of numbers.

"The bank saw rising revenue and profits, and the loan impairment charges slumped but it still wasn't enough to coax buyers.

"Seeing as the business is bouncing back, investors now feel it is time to reinstate the dividend."

The FTSE was also hit by sterling strength against a weak US dollar, with the pound rising nearly 0.2% to 1.323 versus the greenback.

Against the euro, the pound was down 0.2% at 1.115.

Investors were also digesting data showing that the UK construction industry endured a shock slowdown last month, with its growth sliding to its weakest pace for nearly a year.

The closely watched Markit/CIPS UK Construction purchasing managers' index (PMI) fell to 51.9 in July, down from 54.8 in June with economists expecting a figure of 54.1. A reading above 50 indicates growth.

Across Europe, the French Cac and German Dax ended the day down 0.39% and 0.57%, respectively.

Brent crude prices were up 1.3% at around 52.13 US dollars per barrel, after US data showing a further drop in crude inventories stateside.

In UK stocks, Rio Tinto fell 99p to 3,403p after earnings came in shy of expectations. The Anglo-Australian firm said underlying half-year earnings soared by 152% to 3.9 billion US dollars (£2.9 billion).

BAE Systems dropped 16.5p to 590.5p after the defence giant warned that it would take a charge in the second half for overhauling its cyber and intelligence arm, where revenues are "softening".

William Hill surged 15.4p to 268p despite reporting an 11% fall in pre-tax profits to £109 million in the six months to June 28, while revenue grew 3% to £837 million.

Johnston Press slumped 0.38p to 10.5p after the owner of the i newspaper, The Scotsman and the Yorkshire Post revealed a further 3.1% drop in total revenues to £102.9 million, despite reporting a near 15% rise in digital ad sales.

The biggest risers on the FTSE 100 were Old Mutual up 5.6p at 203p, ITV up 4.3p to 175.8p, Paddy Power Betfair up 175p to 7,875p, and Kingfisher up 5.4p to 302.3p.

The biggest fallers on the FTSE 100 were Standard Chartered down 51.2p to 795p, Rolls-Royce Holdings down 36p to 943p, Rio Tinto down 99p to 3,403p, and Micro Focus International down 63p to 2,180p.