The FTSE 100 tracked falls in Asia as leaders of the world's biggest economies gathered in France for a G20 summit set to be dominated by the threat of Greece falling out of the Eurozone.
The leaders of France and Germany, angered at Greece's shock move to call a referendum on its latest bail-out plan negotiated last week, warned Prime Minister George Papandreou yesterday that Athens would see no more aid until it pledged to honour the deal.
With the prospect of the country being kicked out of the euro it emerge that the Greek PM was under fire from his finance minister Evangelos Venizelos who is against the vote.
As well as watching events at the G20 summit in Cannes, investors were also focused on Frankfurt, where the European Central Bank will hold its first policy meeting under new President Mario Draghi.
Many analysts see the ECB as the only institution with the firepower to calm the Eurozone crisis, and the key question after the meeting — at which no change in interest rates is expected — will be whether it will increase its purchases of bonds issued by debt-ridden Eurozone states.
London's blue chip index failed to make any significant gains with insurer Old Mutual the biggest faller, down 2.4 per cent after the market gave a negative response to a trading update even though it said its sales had risen.
Fellow insurer Aviva slipped by 2.2 per cent after it warned that chaos in the Eurozone was hitting its business. Also in the sector Admiral was dented by 1.6 per cent.
Consumer giant Unilever dipped by 2.2 per cent after a trading update in which it warned that 2011 was proving tough on profits.
Among banks Lloyds was down 0.7 per cent as the shock news that chief executive Antonio Orta-Osorio had been forced by doctors to go on medical leave. Barclays nudged down by 0.5 per cent and RBS 0.4 per cent.
The top gainer on the FTSE 100 was Tate & Lyle, up 5.1 per cent, after it reported strong results fuelled by sales of animal feed.
Hedge find giant Man Group was the second highest climber, up 4.4 per cent after a trading update which showed that it had made a partial recovery from a bleak summer in which clients were pulling money out of funds.
BT was up 3.3 per cent as it announced a profits rise triggered by sales of its broadband services.
Luxury retailer Burberry rose by 1.9 per cent, while RSA Insurance edged up by 1.8 per cent.
In Asia the Nikkei closed down 2.2 per cent and the Hang Seng 2.4 per cent.
On the domestic data front, October's UK Markit/CIPS services PMI report showed that the service sector slumped to 51.3 in October from 52.9 and edged closer to the 50 mark that separates growth from contraction.
Meanwhile Britain's economy faces a near 50 per cent chance of lurching back into recession, even if Eurozone policymakers succeed in finding a solution to the bloc's debt crisis, the National Institute of Economic and Social Research said.
Across the Atlantic later investors will be eyeing US initial weekly jobless claims and October's non-manufacturing ISM index.