The FTSE-100 closed 7.9 points lower at 5921.8 after Speaker John Boehner said on Thursday the US President's budget proposals were not balanced.
His comments cast further doubt over the chances of the Democrats and Republicans reaching a budget deal to avoid the fiscal cliff of steep tax hikes and budget cuts on January 1.
Analysts said the Footsie is unlikely to progress and move towards the 6000 mark because of the the ongoing debate.
The uncertainty overshadowed encouraging manufacturing data in China, which revealed the best performance since October 2011, raising hopes that growth in the world's second- biggest economy will start to accelerate.
A bigger-than-expected fall in US consumer prices in November, driven by lower petrol prices, also failed to cheer investors.
The pound was down against the euro at 1.22, but was higher against the US dollar at 1.61.
Among London's risers, China-focused luxury goods group Burberry firmed 2p to 1264p after Morgan Stanley maintained its 1300p-a-share target for the blue-chip stock.
Infrastructure stocks were also doing well with United Utilities, up 2p to 703p, South West Water owner Pennon, up 4p to 624.5p, and power generation firm SSE, ahead 11p to 1444p, a rise of nearly 1%.
There were falls across the insurance sector as Prudential declined 17.5p to 881p and rival Aviva slipped 2.9p to 369.9p.
In a quiet session for corporate news, suitwear specialist Moss Bros climbed by more than 1% after reporting like-for-like sales growth of 3.7% for the 19 weeks to December 8.
There was a similar improvement from Laura Ashley as the fashion and home furnishings chain said like-for-like sales improved by 4.9% in the 19 weeks to December 8.
Meanwhile, shares in Punch Taverns were flat at 7.5p after the pub estate owner said it was trading in line with expectations, with profit per pub stable in the 16 weeks to December 8.
The biggest Footsie risers were Polymetal International, up 26p at 1175p, Kazakhmys, ahead at 14p at 758p, Experian, up 16p at 1015p, and Rio Tinto, ahead 51.5p at 3390p.
The biggest Footsie fallers were Prudential, down 17.5p at 881p, Anglo American, off 30.5p at 1826.5p, Weir Group, down 29p at 1807p, and Admiral Group, off 18p at 1135p.