Blue-chip shares drifted today as house builders were hit by profit-taking and mining stocks suffered after another volatile session in Asia.
The FTSE 100 Index dropped 24 points to 6526.3, the second session in a row in which it has edged lower as it shows no signs of bouncing back after big falls last week on the devaluation of the yuan.
Germany's Dax and France's Cac 40 also finished down a little while New York Dow Jones Industrial Average was in the red too in early trading.
In London, Charles Church owner Persimmon was down nearly 2% or 37p to 2084p. The slide came just a day after its shares hit a new all-time high.
The stock slipped as investors banked gains following half-year results that saw pre-tax profits rise 31% to £272.8 million for the six months to the end of June.
Meanwhile miners were hit hard after Asian markets tumbled overnight - with China's Shanghai Composite dropping more than 6%.
The slump came despite China's central bank injecting the largest sum of money into the financial system on a single-day basis for more than a year-and-a-half amid fears of the yuan's weakness and flows of capital out of the country.
It meant London-listed mining giants were hit by fears of weakening demand in the world's second largest economy. Antofagasta fell 12p to 561.5p while BHP Billiton dropped 21p to 1112.5p and Anglo American dropped 13.3p to 741.9p.
Oil prices were also held back, with Brent crude hovering below 49 US dollars per barrel. Royal Dutch Shell fell 29.5p to 1782.5p and BP dipped 4.4p to 373.8p.
In currency markets, the pound was ahead after official figures showed inflation edging up from zero to 0.1% in July - slightly higher than expectations that it would remain at zero or even turn negative for the second time this year.
Sterling rose by a cent against the US dollar to just under 1.57 and by a cent against the euro to a little below 1.42.
In shares, Persimmon was one of the biggest fallers on the FTSE 100 while fellow house builder Barratt Developments headed lower too, off 12.5p to 640.5p.
In the FTSE 250 Index, Bovis Homes dropped 3%, or 34p, to 1129p. It had fallen 3% in the previous session on concerns over the level of investor returns that it delivers.
Tony Cross, market analyst at Trustnet Direct, said: "There's a degree of scepticism emerging as to just when the party will come to an end for the sector.
"Although it's not looking imminent, there's a growing feeling best of the upside may now be fully priced in."
The biggest risers on the FTSE 100 Index were Glencore up 6.1p at 176.1p, Shire up 85p at 5245p, International Airlines Group up 7p at 550p and easyJet up 20p at 1745p.
The biggest fallers on the FTSE 100 Index were Antofagasta down 12p at 561.5p, Barratt Developments down 12.5p at 640.5p, BHP Billiton down 21p at 1112.5p and Tesco down 3.6p at 198.6p.
ends
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