MARKETS were knocked on Thursday as traders were caught off-guard by the US decision to cancel its summit with North Korea.
Donald Trump has said he will not meet North Korean leader Kim Jong Un, saying rising tensions had ruined "a great opportunity for lasting peace".
The geopolitical upheaval sent US and European stocks downwards, with the FTSE 100 closing the day 0.92% or 71.7 points lower at 7716.74.
The Cac 40 in France and the Dax in Germany were down by 0.31% and 0.94% respectively, while the Dow Jones Industrial Average dropped 0.60%.
Ken Odeluga, market analyst at City Index, said: "With that buffer apparently now removed, we should expect the market to demonstrate a less sanguine attitude to wider geopolitical currents, for instance over faltering discussions in North America and between China.
"US shares will be the most obvious conduit for weakening sentiment, though in the short term, it is also likely to be reflected via the dollar."
In currency markets, sterling was supported by solid UK retail sales, which grew by 1.6% month-on-month.
The pound was up 0.22% against the dollar at 1.338. Against the euro, the pound was flat at 1.141 towards the end of the session.
Oil prices fell back following speculation that the Organisation of Petroleum Exporting Countries would increase output. Brent crude prices fell by 0.75% to $79.050 a barrel.
In UK stocks, Lloyds Banking Group suffered double humiliation after more than a fifth of investors voted against pay for top bosses, while TV star Noel Edmonds publicly berated the board.
At its annual meeting on Thursday, there was more than 20% opposition in terms of votes on the directors' remuneration report, which included a £6.42 million pay packet for boss Antonio Horta-Osorio. Shares closed the session 0.63p lower at 66p.
Telecoms group TalkTalk dived into the red with full-year losses of £73 million after counting the cost of its overhaul. Shares edged down 0.2p to 121p.
Tate & Lyle's shares were lifted when its new boss outlined plans for $100m (£75m) of cost savings and a boost to profits as part of an overhaul after taking up the reins last month.
Nick Hampton, who took over as chief executive from Javed Ahmed in April, outlined a three-pronged strategy to "accelerate business performance and inject more pace into the organisation". Shares rose 7.32% or 44.6p to 653.6p.
BT's shares took a hit after it emerged boss Gavin Patterson is celebrating a £1m hike in annual pay, weeks after swinging the axe on 13,000 jobs.
Mr Patterson took home a total of £2.3m last year after receiving a £1.3m annual bonus, according to the telecom giant's annual report. Shares fell 3.15p during trading to 203.15p.
B&Q owner Kingfisher's shares edged downwards, falling by 1.5p to 296.9p by the market close, after sales were pummelled by the Beast from the East in the first quarter. Like-for-like sales in the three months to April 30 dropped 9%.
The biggest risers on the FTSE 100 were Intertek Group up 176p to 5,350p, Paddy Power Betfair up 225p to 8,855p, Smith & Nephew up 21p to 1,347p and Diageo up 37.5p to 2,745.5p.
The biggest fallers on the FTSE 100 were Mediclinic International down 64p to 615.6p, Morrisons down 9.2p to 245.2p, 3i Group down 28.6p to 985.4p and MicroFocus International down 31.5p to 1,326.5p.
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