Mid-cap Carillion extended losses further.

The blue chip FTSE 100 <.FTSE> index was down 0.6 percent at 7,329.76 points at its close, while mid caps <.FTMC> were 0.7 percent lower.

Defensive firms and dollar earners were among the biggest weights on the index. They included Vodafone (>> Vodafone Group), British American Tobacco (>> British American Tobacco), AstraZeneca (>> AstraZeneca) and Diageo (>> Diageo), as well as financials Prudential (>> Prudential) and Lloyds Bank (>> Lloyds Banking Group).

Education publisher Pearson (>> Pearson) was the biggest faller, down more than 5 percent and giving up early gains after agreeing to sell a 22 percent stake in book publisher Penguin Random House for around $1 billion in a bid to boost its balance sheet and return cash to shareholders.

Investors initially reacted positively to the news but others saw the move as insufficient.

Pearson's shares have fallen around 20 percent this year, struggling after a string of profit warnings as the group battles to get to grips with the rise of digital learning.

"Pearson is stripping back from their core businesses, and are they selling the family china?" Jonathan Roy, advisory investment manager at Charles Hanover Investments, said.

"What this is doing is degenerating their core revenue generation model. So, yes, in the short term you've got some capital, but how are you going to earn money going forward?"

Marks & Spencer (>> Marks & Spencer Group) was also punished after a trading update, tumbling 4.7 percent, on rising concern about food sales.

Though the retailer said its recovery plan was on track and it stuck to its guidance for its 2017-18 financial year, analysts were disappointed by a 0.1 percent dip in like-for-like M&S food sales in its fiscal first quarter.

"With Clothing & Home in line, the concern now relates to (Marks & Spencer's) Food business, which has underperformed the industry for the second quarter in a row," analysts at Investec said in a note.

Among risers, mining firms Glencore (>> Glencore), Anglo American (>> Anglo American), and Rio Tinto (>> Rio Tinto) enjoyed gains after the underlying price of copper rose. [MET/L]

Among mid-caps, construction company Carillion (>> Carillion) continued to suffer fallout after its CEO stepped down amidst a full-year profit warning on Monday.

It sank another 33.5 percent, taking losses over the past two days to 60 percent as worries around a possible rights issue intensified.

"Carillion's share price has reflected balance sheet concerns for some time, but this news is materially worse than expected," analysts at Numis said in a note.

"The scope to address this issue is limited and there are risks which we believe make a major equity issuance a probability."

(Reporting by Kit Rees; Editing by Jeremy Gaunt)

By Kit Rees