The FTSE 100 ended in the red on Tuesday as fears over the standoff between Italy and the EU spooked traders across Europe.
London's premier index closed down 63.16 points, or 0.89%, at 7,040.68.
David Madden, market analyst at CMC, said: "Stock markets in Europe are largely lower as investors remain nervous about the political standoff between Italy and the EU over the budget.
"The anti-establishment coalition in Rome wants to press ahead and boost spending, and in turn increase the budget deficit.
"Brussels has already rejected the proposal, and neither side want to back down. Fears persist that this could trigger another round of the eurozone debt crisis. The strained trading relationship between the US and China is souring sentiment too."
In stocks, Morrisons ended near the bottom of the pile after seeing sales growth slow following the hot summer and World Cup.
Group like-for-like sales excluding fuel were up 5.6% year-on-year in the 13 weeks to November 4.
This was lower than the 6.3% year-on-year growth recorded in the previous quarter as the football and hot weather encouraged shoppers to stock up on food and drink.
Shares closed down 10.05p at 244.5p.
At the other end of the spectrum, Primark owner Associated British Foods (ABF) ended top of the index as investors looked past a 2.1% decline in like-for-like sales at the budget clothing chain.
In the UK, like-for-like sales were up 1.2% and Primark's share of the total clothing market increased significantly amid a declining high street. Overall sales were 5.3% ahead of last year.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "ABF continues to open up new stores, which given the challenges other bricks and mortar retailers are facing looks a bold move - but it's working.
"Overall sales growth is continuing despite declining like-for-like sales, and a popular summer range means margins and profits continue to climb."
ABF shares closed up 72p at 2,460p.
On AIM, shares in oil and gas firm Cabot Energy were on the move after it announced an increase in total reserves and resources for its production and development assets in Canada.
Shares gained as much as 20% before settling and ending the day at 1.8p, a rise of 0.2p.
The pound, meanwhile, held on to earlier gains as hopes of a Brexit deal remain in sight.
The British currency was up 0.25% versus the US dollar at 1.307. Against the euro, sterling was trading 0.2% higher at 1.146.
"The Brexit talks are heating up and Prime Minister May is confident a deal can be reached, but she is not willing to do it 'at any cost'. Sterling is holding above the 1.3000 mark, but the pound might find it difficult to press ahead while the political uncertainty continues," Mr Madden said.
In Europe, Germany's DAX was down 0.09% and France's CAC fell 0.51%.
A barrel of Brent Crude was trading at 71.4 US dollars, down 1.74%.
The biggest risers on the FTSE 100 were ABF up 72p at 2,460p, Marks & Spencer up 4.9p at 302.5p, Direct Line up 4.7p at 322.7p and DS Smith up 4.7p at 385.1p.
The biggest fallers on the FTSE 100 were BT Group down 11.8p at 251p, Morrisons down 10.05p at 244.5p, CRH down 85p at 2,237p and Glencore down 9.25p at 311.9p.
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