Riskier assets such as commodity and banking stocks led the fallers, as the FTSE 100 shed 15.56 points, or 0.3 per cent, to 5,444.82.
Volumes were weak as many investors steered clear of the volatile market, which swung in a near-140 point range.
The FTSE volatility index, a gauge of investor fear, is now up more than a third this month as the Eurozone’s debt problems have claimed the scalps of the Greek and Italian premiers. The index had fallen sharply in October when a solution to the debt crisis appeared imminent.
Miners and integrated oils swung violently as investor sentiment ebbed and flowed with the news coming out of Europe, but both ended the day lower.
Vedanta Resources was a top blue chip faller, down 9.5 per cent as aluminium losses, rising costs and the weakening Indian rupee hit the miner's first-half results.
Anglo American rose 1.3 per cent, although well off intraday highs, after the miner sold its 24.5 per cent stake in its Chilean Anglo Sur project to Japan’s Mitsubishi for $5.4bn (£3.4bn), above some analysts’ expectations.
In an attempt to stave off economic meltdown, Italy moved closer to a national unity government and Greece named former European Central Bank vice-president Lucas Papademos as head of its new crisis coalition.
“These moves represent the start of a potential new trend in crisis management to jettison unpopular politicians and their baggage and replace them with neutral senior bureaucrats on an interim basis to enact and implement necessary reform measures,” said Colin Cieszynski, a market analyst at CMC Markets.
Azad Zangana, European economist at Schroders, said: “The outlook for the Eurozone economy is now significantly more negative.”