Markets ended in the red for the second session in a row on Friday, as warnings of a new Chinese crackdown sparked worries that Hong Kong protesters might take back to the streets.
The FTSE 100 closed the day down 21.97 points to 5993.28.
Late Thursday afternoon, it emerged that China is pushing for new laws to tighten its grip on the city.
Protesters brought parts of the important economic hub to a standstill for months last year amid similar plans from Beijing.
It also sparked fears that an already turbulent relationship with Washington could further deteriorate.
“President (Donald) Trump effectively sided with Hong Kong last year so he is likely to do the same if the situation escalates, and that might renew US-China trade tensions, which is why equity traders are a little nervous,” said CMC Markets analyst David Madden.
The drop could be seen on the FTSE 100, where HSBC and Prudential, both of which are listed on the Hong Kong Stock Exchange, were two of the biggest losers across the day.
The pound had a mixed day, dropping 0.4% against the dollar to 1.2176, while it rose 0.1% to 1.1176 against the euro.
France’s Cac was almost flat, and the Dax in Frankfurt rose less than 0.1%.
In New York, the S&P 500 lost 0.25% of its value, while the Dow Jones was down around 0.5% shortly after European markets closed.
Brent crude oil broke a two-day winning streak to notch up a 3.8% loss to 34.70 US dollars per barrel on fears that the Chinese demand may be lower than hoped.
In company news, the big announcement came from brewer Marston’s, which said it would join with Carlsberg’s UK division to form a joint venture worth around £780 million.
The move, which is the latest in a string of deals involving UK brewers, will create the Carlsberg Marston’s Brewing Company. Shareholders in Marston’s piled in, sending shares up 33.44p to 66p – a jump of 103%.
Govia Thameslink Railway and Southeastern owner, Go-Ahead Group, said coronavirus could almost halve its profit, even after the Government stepped in to support bus and rail companies.
Shares closed down 130p at 1,099p as Go-Ahead said operating profit is likely to be between £63 million and £75 million in the 12 months to the end of June.
Wetherspoon’s unveiled its plans for reopening, including screens at tables and bars. It will spend an initial £11 million upgrading pubs and hiring staff to enforce social distancing.
Investors were pleased, with shares closing up 28p at 1,014p.
And shareholders in easyJet backed the company’s board in a bitter dispute with founder Sir Stelios Haji-Ioannou over a multibillion-pound aeroplane deal.
Sir Stelios failed to convince other investors to vote off four directors, but shares closed down 17.4p at 557.4p, with concerns over a recent data hack remaining.
The biggest risers on the FTSE 100 were Whitbread, up 137p to 2,598p, Burberry, up 45p to 1420p, DCC, up 206p to 6,694p, Auto Trader, up 16p to 521p, and Just Eat Takeaway, up 254p to 8,866p.
The biggest fallers on the FTSE 100 were Prudential, down 103.5p to 1,011p, IAG, down 15.3p to 190.8p, HSBC, down 19.9p to 379p, United Utilities, down 39.8p to 882.2p, and Severn Trent, down 97p to 2,371p.