The FTSE 100 index has taken a tumble this morning, led by Alliance & Leicester after France's Credit Agricole dropped a plan to bid for the bank.
BP and Rio Tinto Group have also paced a decline by commodity producers.
The FTSE 100 Index has lost 22.4 points, or 0.4%, to 5862 in early trading as 82 stocks have fallen and while only 14 have risen.
Alliance & Leicester has lost 75p, or 6.5%, to 1074p, its biggest drop since 2001.
BP has lost 0.5% to 630p while Rio Tinto has declined 0.8% to 2874p.
In Japan stocks declined for the first day in five after North Korea launched missiles over the Sea of Japan, raising concern the communist nation will threaten the region's security.
Shares of Japan's largest companies including Mitsubishi UFJ Financial Group and Honda Motor led declines. Mitsubishi Heavy Industries, a maker of tanks, ships, rockets and other military equipment, advanced on speculation a conflict with North Korea will spur increased defence spending.
The Nikkei 225 Stock Average lost 114.56 points, or 0.7%, to 15,523.94 at it close.
Mitsubishi UFJ, the world's largest bank by assets, fell 20,000 yen, or 1.2%, to 1.6m. Honda, Japan's third-largest car manufacturer, slid 80 yen, or 2.2%, to 3,600. Toyota Motor, the world's second-largest car maker, declined 70 yen, or 1.2%, to 5,940. Matsushita Electric Industrial, the maker of Panasonic-brand products, dropped 40 yen, or 1.7%, to 2,360.
Meanwhile Mitsubishi Heavy added 2 yen, or 0.4%, to 496. Ishikawajima-Harima Heavy Industries, a military ship builder, advanced 1 yen, or 0.3%, to 363. Howa Machinery, a firearms manufacturer, surged 12 yen, or 6.3%, to 204.
In the US the Dow Jones Industrial Average was closed while Americans celebrated their county’s Independence Day.IFAonline
Paul Bruns and Elaine Parkes
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