London's premier index followed global stocks into the red as investors took a dim view of the US president's ability to deliver tax cuts and fresh infrastructure spending.

The FTSE 100 Index closed lower by nearly 0.6% or 43.32 points at 7,293.5 as European markets doubted whether Donald Trump could honour his campaign promises after failing to push through a repeal of Obamacare.

Across Europe, Germany's Dax fell nearly 0.6% while the French Cac 40 dropped by around 0.1%.

The fallout was also hitting the currency markets, with the pound enjoying an uplift after the US dollar sank in response to President Trump's withdrawal of the healthcare bill on Friday.

Sterling was up 0.9% against the greenback at 1.258 and rose 0.1% versus the euro to 1.156.

Jasper Lawler, senior market analyst at London Capital Group, said: "Stocks were under pressure on Monday following the collapse of Donald Trump's first attempt to overturn Obamacare.

"For many, the healthcare bill has been the moment that crystallised the risk of economic failure under The Donald.

"Ironically, the reaction in currency markets to his healthcare failure will suit Donald Trump. Trump wants to improve the competitiveness of US companies abroad and a weaker dollar will help him deliver it."

In oil markets, Brent crude fell 0.6% to 50.69 US dollars per barrel (£40.27) as investors questioned whether Opec would extend production cuts into the second half of 2017.

In UK stocks, BT shares fell 0.7p to 324.95p after being stung by a record £42 million fine by the telecoms watchdog, which is also forcing it to pay out £300 million in compensation to rivals like Vodafone over delayed high-speed cable installations.

Babcock shares dropped 39.5p to 877p after revealing that its order book would take an £800 million hit after announcing plans to terminate a major Government contract to decommission and manage 12 UK nuclear sites.

It will result in a £100 million drop in annual revenues for eight consecutive financial years from 2020/21.

Shares in Old Mutual dropped 4.5p to 218p following news that it had offloaded a 446 million US dollar (£355 million) slice of its asset management arm as part of its business-wide overhaul.

First Group shares jumped 4.1p to 128.2p after it was awarded a contract with Hong Kong's MTR to run South West Trains for seven years from August.

Shares in Cobham fell 2.4p to 126.8p amid news that the embattled aerospace and defence firm faces an investigation by the financial watchdog over its handling of inside information.

Wood Group shares fell 3p to 751p after the company secured a 50 million US dollar (£40 million) contract with Premier Oil to deliver energy services to two North Sea platforms.

The biggest risers on the FTSE 100 were Next up 102p to 4,232p, Centrica up 3.1p to 219.5p, Shire up 45p to 4,721.5p, and Astrazeneca up 46p to 4,974.5p.

The biggest fallers on the FTSE 100 were Antofagasta down 39p to 791.5p, Glencore down 14p to 305.75p, Babcock International down 39.5p to 877p, and Anglo American down 49p to 1,203.5p.