Britain's leading share index fell back on Thursday, reversing the previous session's gains, with euro zone uncertainties to the fore after Moody's cut Spain's debt rating, and ahead of a bond auction by Italy.
Miners led the retreat, tracking weaker copper prices as concerns over the debt crisis continued to be a factor sapping demand interest in metals.
Credit ratings agency Moody's slashed its rating on Spanish government debt on Wednesday by three notches to 'Baa3' from 'A3', saying the newly-approved euro zone plan to help Spain's banks will increase the country's debt burden.
The euro zone debt focus will shift to Italy later on Thursday, with the country set to offer up to 4.5 billion euros in bonds at an auction, with the focus on the borrowing costs, seen sharply rising.
"The auctions are manageable but investors in return for their trust will certainly be demanding an extra premium in form of higher yields once more," said Markus Huber, Head of German HNW (high net worth) Trading, at ETX Capital.
"General activity is expected to be moderate at best with many preferring to stay on the sidelines until the situation in Greece and their 'indirect referendum' on remaining in the Euro has been decided or at least become somewhat clearer."
Greece's re-run general election on Sunday, after a first vote proved inconclusive, still looks too close to call between those parties for and those against the terms of a crucial European bailout deal.
At 0806 GMT, the FTSE 100 index was down 38.18 points, or 0.7 percent, at 5,445.62, having gained 0.2 percent on Wednesday.
Weakness in heavyweight energy stocks was also a big drag on blue chip sentiment.
Royal Dutch Shell was down 0.8 percent. The French government has put on hold plans by Shell to drill for oil in four sites off the coast of French Guiana while it carries out a review of how permits are awarded with an eye on the environment, the energy minister said.
Oil explorer Tullow Oil, which also has operations offshore French Guiana, dropped 2.6 percent.
SKYFALL
BSkyB was the biggest individual blue-chip faller, dropping 7.6 percent, after the satellite broadcaster paid a bigger than expected 2.28 billion pounds to broadcast 116 English Premier League soccer matches per season in a new three-year deal that will start from 2013-14.
The price of the three-year contract, which cements the Premier League's position as the most valuable domestic soccer competition in the world, represents a 70 percent increase.
Numis analysts Paul Richards and Gareth Davies said BSkyB would be paying about 140 million pounds a year more for the rights than the market had anticipated.
They trimmed their rating for BSkyB to "add" from "buy" and cut their share price target to 815 pence from 825 pence.
"Although the price increase was higher than our forecast, we are pleased that the uncertainty over PL (Premier League) rights has been resolved," the Numis analysts said in a note.
Telecoms firm BT Group, which won a deal for 38 Premier League games, shed 3.0 percent on cost concerns.
No important British economic data will be released on Thursday to provide any alternative to the market's euro zone worries, with the main macroeconmic focus to be the latest U.S. inflation data, due at 1230 GMT.
