Tesco, which is expected to report a fall in sales tomorrow, was 2% or 7p lower at 340.9p after HSBC decreased its recommendation on the stock, arguing it needs to do more to make its offer compelling to shoppers.
Signs of sluggish progress in the Chinese economy led to jitters as the start of December trading saw investors begin to book profits for the year, leaving the FTSE 100 Index off 55.2 points at 6595.3.
Miners were worst hit, led by silver producer Fresnillo, which dipped nearly 9% or 73p to 760p, after surveys showed manufacturing in the world's second biggest economy barely expanded in November. In Europe, France's Cac 40 and Germany's Dax were flat while on Wall Street, slow trading after the Thanksgiving weekend saw the Dow Jones Industrial Average hit the red.
A busy week for American economic figures this week, including the latest on jobs, should offer final clues on whether the US Federal Reserve will taper its monthly bond purchases on December 18.
There was good news from the UK economy after figures revealed the manufacturing sector steamed ahead with the fastest growth in three years, following two months in which the pace of expansion slowed.
It helped sterling to hang on to recent gains on the currency markets, steadying at 1.64 US dollars and 1.21 euros.
In London, the decline for Tesco shares was accompanied by a fall of 10.6p to 396.8p for Sainsbury's, while Morrisons dipped 6p to 259.5p.
The losses came as it emerged that Lidl plans to double its UK stores over the next few years.
It also reported that like-for-like sales are growing at a rate of 18% a year as more British shoppers turn to discounters such as Lidl and rival Aldi. Elsewhere in the London market, Lloyds Banking Group did well after it said it grew its lending to UK businesses and households via the Funding for Lending Scheme by £3.1 billion in the third quarter. It said this was stronger growth than other participants in the scheme had achieved over the quarter.
With the group also confirming the appointment of Lord Blackwell as its next chairman, shares rose by 1.2p to 78.6p.
Debenhams was among the biggest fallers in the FTSE 250 Index after Barclays Capital cut its price target on the department store chain from 97p to 80p. Shares were 4% lower, leaving the group 3.8p cheaper at 93p.
The biggest FTSE 100 risers were TUI Travel, up 8p to 375.3p, Lloyds Banking Group, up 1.2p to 78.6p, Royal Bank of Scotland, up 4.2p to 331.4p and Croda International, up 22p to 2346p.
The biggest FTSE 100 fallers were Fresnillo, down 73p to 760p, Randgold Resources, down 189p to 4157p, Anglo American, down 56p to 1293p and Mondi, down 32p to 973p.