Britain's blue chip FTSE 100 <.FTSE> index closed down 0.3 percent at 7,414.74 points, while mid caps <.FTMC> fell 0.5 percent.

"Equity markets in Europe are in the red today as tensions surrounding North Korea were heightened again on the back of the nuclear bomb test carried out by the regime over the weekend", said David Madden from CMC Markets.

"Traders are clearly nervous, as stocks are lower, but the sell-off today hasn’t been as bad a previous ones."

Ken Odeluga, market analyst at City Index, added: "There is a thing called habituation. Markets are getting used to it, so whilst there is a bit of disquiet and there is a bit of noticeable reaction, I would suggest it is actually becoming more and more muted."

Banking stocks, which are more volatile than other sectors, tend to have their shares sold off more heavily when investors dump risky assets. Shares in HSBC (>> HSBC Holdings), Barclays (>> Barclays) Standard Chartered (>> Standard Chartered) and Lloyds dropped between 0.2 and 1.5 percent.

In the wider financial sector, Prudential (>> Prudential) fell 1.9 percent, Provident Financial and Standard Life Aberdeen both retreated 1.8 percent.

However, gold and silver miners had a positive session. These stocks are commonly used as proxies for investing in gold, which is considered a safe haven asset in times of political and financial uncertainty.

Shares in precious metals miner Fresnillo (>> Fresnillo) posted the best performance with a 2.9 percent rise while Randgold Resources (>> Randgold Resources) rose 2 percent.

Shares in troubled mid cap Acacia Mining (>> Acacia Mining PLC) dropped 2.4 percent after it said that it would reduce its operations in Tanzania and cut jobs.

Shares in speciality chemicals firm Victrex (>> Victrex) rose 8.6 percent to a record high after cutting its effective tax rate and confirming the appointment of a new CEO.

(Reporting by Kit Rees and Julien Ponthus; Editing by Keith Weir and Pritha Sarkar)

By Kit Rees