Rising tensions in the Middle East and shrinking appetite for risk caused stocks to give up ground today, ending a three-day rally.
Poor UK economic data added to the market’s woes, with inflation and public borrowing hitting new highs.
The FTSE 100 closed 0.4 per cent down at 5,762.71.
“It is not too surprising that some of the enthusiasm towards shares has cooled off a little considering the bounce back seen over the past week,” said IG Index sales trader Yusuf Heusen.
“With the initial euphoria gone, the uncertainty surrounding Japan and Libya is likely to act as cap to rallies for the short-term.”
Rising unrest in Syria and Yemen now threatens both presidents there and pushed oil prices back up to $115.75 a barrel.
Indian power company Essar Energy bounced back to the top of the risers board to close up 2.04 per cent at 449.4p after investors bought back in following a low day yesterday.
Engineers, energy companies and insurers also buoyed the top of the index, with Cairn Energy finishing two per cent higher at 428p after reporting a return to profit in 2010, banking $577m (£355m) up from a $27m loss in 2009.
Energy majors BG Group (up 1.6 per cent at 1,505.5p) and National Grid (1.3 per cent higher at 585.5p) also rebounded following falls yesterday.
But car parts makers and sellers have suffered as the Japanese automotive industry remained at a standstill following the earthquake and tsunami.
Toyota has said all 12 of its Japanese plants will stay closed until at least Saturday.
The news has left auto parts maker GKN down 3.8 per cent to close at 189.1p, was the biggest blue-chip faller.
Johnson Matthey which makes catalytic converters, fell 2.6 per cent to 1,835p, while mid-cap motor retailer Inchcape dropped 4.5 per cent.
Cruise operator Carnival closed 3.1 per cent lower at 2,452p after posting disappointing first-quarter results hurt by high fuel prices. And travel firm TUI Travel also fell 1.9 per cent to 228.2p after its hopes of a rescue takeover by main shareholder TUI lost ground.
US markets also declined on oil price worries after their three-day rally.
The Dow Jones industrial average lost 17.90 points, or 0.15 per cent, to close at 12,018.63. The Standard & Poor's 500 Index dropped 4.61 points, or 0.36 per cent, to end at 1,293.77. The Nasdaq Composite Index shed 8.22 points, or 0.31 per cent, to finish 2,683.87 lower.