The FTSE 100 Index has slipped 64.8 points, or 1.1%, to 5697.30 points this morning, led by BP after crude oil fell from a three-week high in New York.
BP has fallen 8.5p, or 1.3%, to 627.50p after crude oil fell from a three-week high in New York. The European Union will today present incentives to persuade Iran to halt its nuclear enrichment.
Rio Tinto has declined 90p, or 3.1%, to 2,781p, while Anglo American has fallen 78p, or 3.7%, to 2,018p.
BAA has advanced 19.5p, or 2.1%, to 947.5p after Goldman Sachs said it had submitted a fully-financed proposal of 955.25p a share for the world's largest airport operator.
In Japan, the Nikkei 225 Stock Average lost 283.45 points, or 1.8%, to 15,384.86 points after US Federal Reserve chairman Ben Bernanke said he will act to curb inflation, suggesting borrowing costs will rise in Japan's largest export market.
Mitsubishi UFJ Financial Group fell 30,000 yen, or 1.95%, to 1.5m yen, Mitsui Fudosan fell 65 yen, or 2.75%, to 2,300 yen and Mitsui Sumitomo dropped 54 yen, or 3.83%, to 1,356 yen.
Daiwa Securities declined 36 yen, or 2.47%, to 1,424 yen.
Lower oil prices also took Inpex Holdings down 23,000 yen, or 2.37%, to 947,000.
In the US, the Dow Jones industrial average tumbled 199.15 points, or 1.77%, to end at 11,048.72 points yesterday, its lowest close in three months, as investors worried about a potential rise in interest rates.
Shares of Caterpillar fell 4.8%, or $3.48, to $69.33, while shares of 3M dropped 2.2%, or $1.83, to $82.95.
Standard Pacific led home builders' stocks lower, falling 8.6%, or $2.57, to $27.43, after the company on Friday said it would lower its earnings forecast for the full year when it reports results at the end of July.
One positive was an uptick in the stocks of real estate investment trusts (reits) after news Brookfield Properties and a private equity partner will buy Trizec Properties and its Canadian arm.
Brookfield shares rose 0.6%, or 19 cents, to $31.17.IFAonline
Despite improved risk appetite
FOS award limit increase
Relates to 136 million transaction reports
Ceremony will take place 13 November