AstraZeneca dragged the London market lower on Thursday as investors checked out of the pharmaceutical giant after it revealed that a lung cancer drug trial had failed.
The company's stock closed down more than 15%, or 788p to 4,325p, as the first round of the ''Mystic trial'' showed that a combination of durvalumab and tremelimumab does not improve survival rates any more than chemotherapy.
The FTSE 100 Index slipped 9.31 points to 7443.01, with the setback for AstraZeneca adding to the speculation over the future of chief executive Pascal Soriot, who has been linked with a move to Israeli firm Teva.
Across Europe, Germany's Dax dropped 0.8% and the Cac 40 in France edged down by 0.1%.
Connor Campbell, financial analyst at Spreadex, said: "The Dax saw its losses double once the US session got under way, the 120-point fall leaving the German index back below 12200 and near its worst price since Macron won the first round of the French presidential election back in April.
"As for the FTSE, despite flirting with a weightier drop thanks to cable's 10-month high and AstraZeneca's 16% cliff dive the UK index managed to hold off the kind of losses seen by its German cousin, instead dipping just 10 points."
On the currency markets, the pound fell 0.4% against the US dollar at 1.30 as the greenback held strong after pushing ahead in response to the Federal Reserve's decision on Wednesday to leave US interest rates unchanged.
Sterling climbed 0.4% versus the euro at 1.120.
The price of oil remained firmly above the 50-dollar mark, as the commodity continued to clock gains on the back of a slide in US crude inventories.
Brent crude increased by 0.9% to 51.45 US dollars a barrel, with traders becoming more confident that the global supply glut can be tackled effectively.
In UK stocks, Lloyds Banking Group was among the biggest fallers despite statutory pre-tax profits rising 4% to £2.54 billion for the half-year.
Shares were down 1.6p to 67.5p after the banking giant took a £1.6 billion hit to cover ballooning compensation costs linked to the mis-selling of payment protection insurance (PPI) and to resolve its mistreatment of mortgage customers.
Its PPI costs for the six months to June 30 swelled to £1.05 billion, having earmarked £350 million for claims in the first quarter, and provisioned for another £700 million in the second quarter.
In a contrast of fortunes, drinks giant Diageo saw its share price soar thanks to a healthy sales update and the announcement of a £1.5 billion share buy-back scheme to be paid out in 2018.
The Smirnoff vodka and Guinness-maker said operating profit surged 25% to £3.6 billion for the year ending in June, while reported net sales climbed 15% to £12.1 billion over the period.
The group was boosted by robust growth in international markets and strong scotch sales, while sterling's weakness laid the foundations for an extra lift when translating overseas earnings back into pounds.
The biggest risers on the FTSE 100 Index were Diageo up 136p to 2,408.5p, Rentokil Initial up 16p to 290.8p, Next up 147p to 3,927p, Smith & Nephew up 43p to 1,344p.
The biggest fallers were AstraZeneca down 788p to 4,325p, SSE down 80p to 1,380p, Provident Financial down 53p to 2,090p, Lloyds Banking Group down 1.6p to 67.5p.
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