The blue-chip FTSE 100 index dropped 0.1%, while the mid-cap FTSE 250 index fell 0.5%.
Governments across Europe announced tighter and longer coronavirus lockdowns and curbs amid fears of a fast-spreading variant first detected in Britain, with vaccinations not expected to help much until the spring.
"Investors are still wondering where the next big catalyst for further upside will come from, and are painfully aware that the COVID-19 crisis remains untamed despite the introduction of vaccination programmes," said Chris Beauchamp, chief market analyst at IG.
The FTSE 100 has recorded consistent monthly gains since November, supported by hopes of a vaccine-led economic recovery, but it has recently lost steam as a wave of coronavirus infections sparked new business restrictions.
Housebuilder Persimmon dropped 6.2% and fell the most on the FTSE 100 index after it reported a 9% fall in 2020 revenue and flagged risks to its construction sites from the fast-spreading new variant of COVID-19. [L4N2JO1QD]
"The slide probably reflects investors' concerns over the current state of the pandemic and how it could impact near-term demand...," says Russ Mould, AJ Bell Investment Director.
However, deliveries of COVID-19 vaccines to Britain are on track and sufficient to meet the government's vaccination targets, Health Secretary Matt Hancock said, although he declined to give figures on supplies.
Global recruiter PageGroup fell 2.8% after it posted a 20% drop in fourth-quarter gross profit, while fashion retailer ASOS jumped 2% on forecasting a full-year profit after Christmas trading surpassed its expectations.
(Reporting by Shashank Nayar in Bengaluru; Editing by Uttaresh.V and Alex Richardson)
By Shashank Nayar