A deal between legislators in Washington to avert another budget crisis might have been expected to calm nerves but instead has heightened expectations that the Fed will be able to taper the multi-billion dollar quantitative easing programme.
Asian stocks dipped overnight on the speculation and the FTSE-100 Index followed suit, down 62.5 points to 6445.2. Germany's Dax and France's Cac 40 were also in the red, as was New York's Dow Jones Industrial Average. On currency markets, the pound was flat, at 1.63 US dollars and 1.19 euros.
But in equities, the tapering jitters saw investors seek out low-risk stocks - on a shortened FTSE-100 risers board that was topped by United Utilities, up 11p to 655.5p. National Grid climbed 4p to 750p.
Royal Bank of Scotland fell heavily for a second successive session, as traders digested Wednesday's announcement that it will pay £61 million in fines over sanctions-busting allegations to American authorities.
Shares were off nearly 3%, or 9.2p, at 317.7p, on top of a similar fall in the previous session after the surprise announcement of the departure of its finance director.
Lloyds Banking Group, which was hit with a £28m fine this week for serious failings in its sales practices, dropped 1.8p to 75.6p.
Sports Direct International was the biggest faller after its half-year results came in short of the elevated expectations of some analysts.
The company said the result, which included a 17% rise in profits to £146.2m, was ahead of its own expectations but that trading since then has returned to more normal patterns. Shares were more than 12%, or 97p, lower at 674p.
Oil and gas services firm Wood Group was also under pressure after it warned that earnings from its engineering division will be down by around 15% next year.
The company, which designs offshore oil rigs, blamed project delays and trading weakness in Canada.
The warning resulted in its shares falling by nearly 10%, off 79p to 718p, in the FTSE-250 Index and also impacted other players in the oil and gas services sector, including blue-chip stock Amec, off 55p to 1049p, or 5%.
Meanwhile, shares in outsourcing firm G4S and Serco were lower after Justice Secretary Chris Grayling said they would lose contracts for electronically tagging criminals to rival firm Capita following an overcharging scandal.
G4S fell 2.8p to 257.5p and Serco dropped 6p to 438.5p.
The biggest FTSE-100 risers were United Utilities up 11p to 655.5p, TUI Travel up 2.5p to 379.4p, National Grid up 4p to 750p and Croda International up 8p to 2276p.