The top share index fell on Tuesday morning as Italian and Spanish government bond yields rose, prompting investors to steer clear of equities ahead of October inflation data.
London's blue-chip index <.FTSE> was down 31.67 points, or 0.6 percent, to 5,487.37 by 0856 GMT in quiet trading, adding to the previous session's 0.5 percent loss.
The main cause for concern was Italian and Spanish bond yields, with Italy's 10-year bond edging closer to 7 percent, a level widely reported as being the point at which refinancing the country's debt becomes unsustainable.
I feel that any upside will be capped because we are seeing yields creep up again for euro zone countries, and given the GDP figures for France and Germany coming in in-line with expectations, there seems to be little to get bullish about at the moment, said Manoj Ladwa, senior trader at ETX Capital.
While France and Germany posted solid third-quarter growth, those at the sharp end of the debt crisis are not faring as well and analysts expect bleaker times ahead across the currency bloc.
The euro zone GDP flash estimate for July-September at 10 a.m. will come under scrutiny, with a reading below expectations for 0.2 percent growth likely to intensify worries about the bloc's dilemma -- austerity measures hurting growth.
In terms of domestic economic data, October inflation numbers were scheduled for 9:30 a.m.
In a note, UBS forecast a high risk of a technical recession in Britain and Europe next year and lowered its 2012 earnings per share growth estimate to 0 percent from 3 percent.
It set a 6,100 target for the FTSE 100 by end-2012, saying: Fortunately, the FTSE 100 is not the UK economy -- we estimate 54 percent of revenues are generated outside the UK and Europe.
UBS recommended investors be overweight in mining, food retail, real estate, utilities, and aerospace & defence, and underweight in telecoms, beverages, travel & leisure, and technology.
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Economic concerns prompted profit taking in Burberry
Seymour Pierce said: While slightly better than our H1 forecast, given the global macro uncertainty currently, we are maintaining our 2011/12 (pretax profit) forecast of 375 million pounds (373 million pounds consensus).
On the FTSE 250 <.FTMC>, troubled telecoms provider Cable & Wireless Worldwide
Miners <.FTNMX1770> and banks <.FTNMX8350>, a gauge of investors sentiment over the outlook for the global economy, weakened. Both sectors have lost more than a quarter of their value in 2011 on concerns the global economy may fall into recession in part a result of Europe's ongoing debt crisis.
Smith & Nephew
(Additional reporting by Jon Hopkins and Tricia Wright; Editing by Dan Lalor))