Greece's failure to reach a concrete deal with creditors to avoid a default depressed world markets today, with banks among the biggest losers.
Private lenders are understood to have agreed to write-off half the country's debt in a tentative agreement, but this could still fall apart and fears remain that Greece could yet need a further bailout.
With no news coming out of a summit of European leaders capable of enthusing traders about the area's growth prospects, the FTSE 100 Index fell 1%, or 62.4 points to 5671.1. France's Cac-40 and Germany's Dax were down by similar amounts.
Elsewhere in the eurozone, figures showed Spain's economy contracted 0.3% in the final quarter of 2011, bringing the nation closer to recession.
And the amount Italy was forced to pay to borrow money at a bond auction came down from a month ago, but is still at a level widely seen as unsustainable, while Portugal's implied borrowing costs continued to rise.
The US's Dow Jones Industrial Average was down some 0.6% as the London market closed. Figures showed Americans' incomes rose at the strongest rate since March, but spending remained flat.
The pound was up against the euro at 1.20 after Greek worries impacted the single currency. But sterling was down against the dollar at 1.57.
Banks also suffered amid the eurozone fears, while French proposals to bring in a financial transactions tax also threaten to hit profits. There are fears that other countries could introduce similar measures.
Barclays and Lloyds Banking Group both lost 4% of their value, down 9.3p to 213.6p and 1.3p to 31.1p respectively.
Royal Bank of Scotland was 1p lower at 26.8p after a weekend of turmoil that eventually saw chief executive Stephen Hester give up his £1 million shares bonus.
In a quiet session for corporate news, Hovis and Mr Kipling owner Premier Foods enjoyed a 10% surge after announcing plans for a major television advertising push.
It admitted its marketing efforts had recently failed to keep pace with competitors. Shares rose 1p to 11p.
Meanwhile, Cranswick, which supplies sausages and bacon to supermarkets, saw its shares rise 1% after reporting a 10% sales jump as its pork products featured on more dinner tables over Christmas.
It added that meat-eaters were turning to pork because it represents good value and is healthier compared to other types of proteins, while exports were buoyant.
Shares were up 11p to 770p as analysts nudged higher their profits forecasts.
And Mecca bingo owner Rank was showing the right numbers as shares lifted 4.1p to 131.1p. This followed confirmation that it was talking to rival Gala Coral about buying its 24-strong casino arm in a move to bolster its own Grosvenor division, which currently operates from 35 sites.
The biggest Footsie risers were AstraZeneca up 19p at 3055p, International Power ahead 2p at 332p, Polymetal International up 6p at 1131p, and GlaxoSmithKline ahead 7p at 1427.5p.
The biggest Footsie fallers were Essar Energy down 7.6p at 126.8p, Barclays off 9.3p at 213.6p, Lloyds down 1.3p at 31.1p, and Vedanta Resources down 50p at 1176p.