Blue-chip shares suffered a negative start to the week as escalating tensions over the Ukraine, together with fears over the Chinese economy and the pace of recovery in the eurozone, combined to weigh on investor sentiment.

The FTSE 100 Index slipped 36.8 points to 6520.4 as Russian troops seized Ukrainian ships and military installations in the Crimean peninsula. Tokyo's Nikkei index had earlier jumped 1.8% on hopes that the latest disappointing manufacturing report from China would prompt leaders to introduce growth measures focusing spending on infrastructure and reforms.

But there was no such bounce for European stocks after a survey of factory purchasing managers showed the region struggled to make headway in March as the headline index fell slightly to 53.2, indicating very modest growth.

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France's Cac 40 and Germany's Dax were sharply down, each losing more than 1%. On Wall Street, the Dow Jones Industrial Average was also in the red at the time of the close in London. On currency markets, the pound held firm at 1.65 US dollars and 1.20 euros.

Energy companies were among the fallers in London after reports regulator Ofgem intends to refer the big six energy companies to the new Competition and Markets Authority.

As the move could potentially lead to the separation of their power generation and retail arms, SSE and British Gas owner Centrica were down by 35p at 1475p and 6.4p at 331.5p respectively.

Meanwhile, Lloyds Banking Group rose more than 1% after Investec Securities restored its buy rating on the part-nationalised bank. Shares were 1.1p higher at 78.5p.

Fellow state-backed bank Royal Bank of Scotland, which is reported to have started preliminary talks about the sale of its US arm Citizens to Japanese bank Sumitomo Mitsui, climbed 4.5p to 303.6p while Barclays lost 1.8p to 234p.

Supermarkets recovered some of the ground lost in recent sessions as Tesco rose 2.4p to 293.4p, Sainsbury's added 0.9p to 310.4p and Morrisons lifted 1p to 212.2p.

However, bookmaker William Hill continued to lose value in the wake of the Chancellor's decision to increase duty on fixed-odds betting machines from 20% to 25% at an estimated annual cost to Hills of around £22 million.

Shares dropped by another 3.2p to 335.9p to leave the bookmaker 11% lower than sit was the day before last week's Budget.

The biggest FTSE 100 risers were BG Group, up 20.5p to 1082.5p, Royal Bank of Scotland up 4.5p to 303.6p, Lloyds Banking Group up 1.1p to 78.5p and Diageo up 19.5p to 1819.5p.

The biggest FTSE 100 fallers were Randgold Resources down 204p to 4627p, Fresnillo down 33p to 852p, Smiths Group down 43p to 1280p and Hargreaves Lansdown off 40p at 1374p.