The blue-chip FTSE 100 index <.FTSE> ended the day 0.3 percent lower, falling back from the record high it touched on Friday.
A parliamentary election on Thursday was looking more uncertain as some polls suggested Prime Minister Theresa May's Conservative Party was not certain to win a majority.
Markets largely absorbed the geopolitical shocks of an attack in London over the weekend and an escalating diplomatic rift between Saudi Arabia, Egypt, the United Arab Emirates, Bahrain on one side and Qatar on the other.
But travel and leisure sector stocks were among the worst-performing on the index.
Budget airline easyJet (>> easyJet plc) fell 3.2 percent, and Merlin (>> Merlin Entertainments PLC), which runs attractions including London's Madame Tussaud's waxworks museum, fell 2.4 percent.
British Airways' owner IAG (>> International Consolidated Airlns Grp SA) was down 2.6 percent, while the broader pan-European sectoral index <.SXTP> dropped 0.8 percent.
Ocado (>> Ocado Group PLC) reversed course to end 1.2 percent lower after touching a 14-month high, as investors reassessed the online grocer's long-awaited international deal with an unidentified regional European retailer.
The online grocer announced the deal on Sunday, a year and a half after missing a self-imposed deadline to secure one. Ocado said it would provide the partner with software, know-how and support services to create an online grocery business.
"Ocado trades at 21 times next year's EBITDA (earnings before tax, interest, depreciation and amortisation), three times higher than the industry's 6.6 times. That means Ocado needs lots of big deals to warrant this valuation," said Bernstein retail analyst Bruno Monteyne, adding the deal's earnings potential was unclear.
Ocado's shares have gained 37 percent in the past two months, possibly in anticipation of a deal, so the good news could already be in the share price, Monteyne added.
Sage Group (>> The Sage Group plc) fell 2.7 percent after analysts expressed doubts over the sale of its U.S. payments business.
"We are surprised a) at the low price (9 times earnings) and b) that the disposal was not to an industry player able to fulfil Sage's ambition of partnering to provide a global payments platform to its customers," said an analyst at Numis.
Stocks among the Qatar Investment Authority's top holdings were little changed. Glencore (>> Glencore PLC) fell 1.3 percent in a generally weaker basic resources sector, and Royal Dutch Shell <RDSa.L> was up 0.2 percent.
Elsewhere, broker notes sent some stocks south, with miners particularly targeted.
Antofagasta (>> Antofagasta plc) was the top blue-chip faller, down 3.5 percent after HSBC cut it to 'reduce' from 'hold'.
Kaz Minerals (>> KAZ Minerals PLC) was the top loser among mid-caps, down 3.8 percent after HSBC cut its rating on the Kazakhstan copper miner to 'reduce' from 'hold', citing recent weakness in copper prices and strength in the Kazakh currency, the tenge.
(Reporting by Helen Reid; Editing by Mark Potter)
By Helen Reid