The FTSE 100 index is currently down 18.7 points, or 0.32%, to 5,852.2, with weak oil stocks leading the drop.
As oil prices have slipped towards $73 a barrel on a fragile truce between Israel and Lebanon, and as oil is to be kept flowing from North America's largest field, BP has fallen 0.24% to 614.5p, while Royal Dutch Shell has slipped 0.32% to 1,853p.
Miners have also eased, with Rio Tinto slipping 1.07% to 2,682p, while Antofagasta is down 0.65% to 423p, Vedanta has fallen 0.79% to 1,251p, and Xstrata has dropped 1.17% to 2,194p.
Elsewhere, shares in Shire Pharmaceuticals have gained 5.39% to 929p as the group said it had settled pending litigation with Barr Pharmaceuticals, stopping Barr from marketing a generic version of Shire's hyperactivity drug Adderall in the United States until 2009, except in certain circumstances.
Property groups also bucked the broadly lower trend with Hammerson rising by 0.95% to 1,276p, while Countrywide is up 1.24% to 406.75p after the property services company said its first-half profit soared as it booked profits from asset disposals.
In Japan the Nikkei 225 Stock Average closed down 40.92, or 0.3%, to 15,816.19 despite earlier rises of as much as 0.4%, as energy companies fell over the Middle East ceasefire.
Inpex, Japan's biggest oil explorer, slid 30,000 yen, or 2.8%, to 1.03 million, to drop for a fourth day, while Nippon Oil the nation's biggest petroleum refiner, lost 16 yen, or 1.7%, to 924, as lower oil prices reduced the value of Nippon Oil's stockpiles and the oil and natural gas the company pumps from overseas fields.
And Mitsui O.S.K. slumped 24 yen, or 2.9%, to 808, as Japan's second-largest shipping company said one of its tankers spilled about 4,500 metric tons of crude oil into the Indian Ocean when it collided with another ship.
Meanwhile Sony, the world's second-biggest consumer electronics maker, lost 20 yen, or 0.4%, to 5,210 after Dell said it is recalling 4.1 million notebook PC batteries that may burst into flames. The recall is the largest ever in the consumer- electronics industry.
However elsewhere financial stocks performed well, as Orix, the nation's largest non-bank lender, climbed 590 yen, or 2%, to 29,740, while Aeon Credit Service, another card provider, surged 240 yen, or 9.6% to 2,735.
In the US the Dow Jones Industrial Average closed slightly higher with gains of 9.84 points, or 0.09%, despite a strong showing from technology and computer stocks.
Shares of IBM gave one of the biggest lifts to the Dow after rising 1.59% to close at $76.68, while Intel rose 2.64% to $17.87, and Hewlett-Packard gave a strong performance to rise 0.73% to $33.29.
However the drop in crude oil prices prompted investors to sell some energy shares, with Exxon Mobil closing down 0.7% to $69.25, as US crude oil for September delivery fell 1.1%, to settle at $73.53 a barrel as a truce to end five weeks of fighting between Israel and the Hizbollah in Lebanon took effect.
Elsewhere Cisco Systems rose 2.8% to $20.09 after reports the company is set to benefit from telecommunications companies upgrading their networks to handle next-generation services such as video.
However Caterpillar was the biggest drag on the Dow with a fall of 1.6% to $65.96, closely followed by Alcoa which slipped 1.2% to $27.93, while Boeing dropped 0.75% to $75.39.IFAonline
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till