The FTSE 100 fell in early trading tracking overnight losses on Wall Street as the US earnings season revealed corporate weaknesses.
US stocks fell for a fourth day after a sales warning from engine maker Cummins came on top of earlier weak forecasts from chipmakers Applied Materials and Advanced Micro Devices.
In London luxury retailer Burberry, down five per cent, was the biggest faller.
The drop came as the company reported slowing sales growth. Revenue was £408m in the three months to the end of June, an underlying increase of 11 per cent.
That was down from growth of 15 per cent in the fourth quarter of the previous year.
Meanwhile interdealer broker ICAP shed 0.4 per cent early on after saying it was bringing forward plans to slash £50m of annual costs.
The move is aimed at countering a trading slowdown that forced revenue down nine per cent in the last quarter.
Temporary power and lighting provider Aggreko was off by just over three per cent. Chemicals company Johnson Matthey also nudged down by more than three per cent.
Engineer Weir Group retreated by 2.2 per cent while Polymetal was the poorest performing miner on the index with its stock dipping 2.3 per cent.
In banking Lloyds was down 1.8 per cent while RBS was flat.
Barclays was off by 0.8 per cent as it continued to be weighed down by pressure from the rate fixing scandal which has engulfed the bank.
On the positive side iPhone chipmaker Arm Holdings, up 1.5 per cent, was the highest climber on the index.
A string of companies rose around 0.5 per cent including insurer Aviva, property company Hammerson, BT Group and Schroders bank.
In Asia the Nikkei and Hang Seng closed flat.
Meanwhile investors were eyeing unfolding events in the eurozone which are key to market sentiment.
Spanish Prime Minister Mariano Rajoy said this morning he would raise value-added tax by three percentage points to 21 per cent as part of a large package of tax hikes and spending cuts aimed at trimming the public budget by €65bn.
That followed Italy saying it may want to tap eurozone aid to ease its borrowing costs as finance ministers struggled to convince markets they are getting a grip on the bloc’s debt crisis.