Latest figures showed eurozone inflation sank to 0.5 per cent in May, adding to fears that it could plunge into a spiral of falling prices and further fuelling expectations that the European Central Bank will take radical stimulus action later this week.
The FTSE 100 Index fell 27.8 points to 6836.3 while Germany's Dax and France's Cac 40 also dropped into the red.
In New York, the Dow Jones Industrial Average was in negative territory at the time of the close in London.
The decline in European markets came despite a strong session in Asia as latest manufacturing data from China offered hope that a slowdown in the world's second-largest economy is stabilising.
But UK-listed miners failed to take the positives from the data - which still showed contraction in the sector - with Fresnillo falling 16.5p to 785.5p and Anglo American down 33.5p to 1458p.
On currency markets, sterling held firm at 1.67 US dollars and 1.23 euros.
In equities, big supermarkets were among the fallers as industry data showed their market shares continue to be squeezed under pressure from discounters Aldi and Lidl with US-owned Asda the only one of the "big four" to increase its slice of the pie.
Tesco saw its share in the last three months slip to 29 per cent from 30.5 per cent a year earlier, with sales down 3.1 per cent, according to the figures from Kantar Worldpanel.
Ahead of a first quarter trading update on Wednesday, shares in the UK's biggest grocer fell 3p to 297.5p.
Morrisons also suffered a sales decline and dropped 2 per cent, or 4.2p, to 194.4p. Sainsbury's, which saw its market share fall, was down 5.3p to 333.8p.
Elsewhere in the top-flight, building supplies firm Wolseley was 53p higher at 3363p after strong trading in the United States and Scandinavia helped it offset lower like-for-like revenues growth in the UK in the quarter to April 30. In the FTSE 250 Index, shares in estate agency chain Foxtons were nearly 7 per cent or 21.9p lower to 307.9p following the announcement that chief executive Michael Brown is to step down after 12 years with the firm.
He will be replaced by chief operating officer Nic Budden.
South West Water owner Pennon fell 23.5p to 760p as investors focused on a 19.5 per cent drop in profits for its Viridor waste management business. Overall, profits were 9.1 per cent higher at £207.3 million.
The biggest risers on the FTSE 100 Index were Wolseley, up 53p at 3363p, easyJet up 21p at 1580p and Royal Dutch Shell up 21.5p at 2470p.
The biggest fallers on the FTSE 100 were Coca-Cola HBC down 38p at 1380p, Anglo American down 33.5p at 1458p and Morrisons down 4.2p at 194.4.