The blue-chip FTSE 100 <.FTSE> index ended the day down 0.1 percent at 7,178.01 points, while mid-caps <.FTMC> slipped 0.3 percent.
UK stocks, boosted by their strong commodities weighting, easily outperformed European benchmarks which fell 0.6 to 1.4 percent.
Sterling popped higher following the release of UK consumer price data, which showed inflation unexpectedly held close to its highest level in nearly six years in January.
"The big source of fright out there in the market is higher inflation. It's centered in the U.S., but it's a global phenomenon," said Jasper Lawler, head of research at London Capital Group.
"This data coming in at a slightly faster tick than we were expecting just supports that narrative that actually global inflation is on the rise and that interest rates are probably going to have to follow suit," Lawler added.
Trading was apprehensive as the data reignited concerns around higher inflation and rising bond yields, key drivers of the recent sell-off across global equity markets.
Last week the FTSE suffered its biggest weekly loss since the beginning of 2016, ending the week at a 13-month low.
The firmer pound hurt heavyweight international earners such as Unilever (>> Unilever), Imperial Brands (>> Imperial Brands) and AstraZeneca (>> AstraZeneca), which all fell.
Gains for mining firms helped limit losses, however, with firmer metals prices driving Glencore (>> Glencore), Rio Tinto (>> Rio Tinto) and BHP Billiton (>> BHP Billiton Plc) up 1.6 to 2.6 percent.
Shares in advertising group WPP (>> WPP Group) rose 3.6 percent, in line with Publicis (>> Publicis Groupe) after the French rival agency won a multi-year contract with Daimler's (>> Daimler) Mercedes-Benz.
Food delivery company Just Eat (>> Just Eat) was a top gainer, rising 3.8 percent to a fresh record high. German rival Delivery Hero (>> Delivery Hero) was also among top European gainers, a day after JP Morgan issued a note calling the stock a 'top pick' in the Internet space.
Shares in TUI <TUIT.L> ended the day up 1.2 percent, having hit a record high earlier after the travel group said summer trading was very good.
"What's really driving the shares to fresh record highs ... is likely lower debt and improved underlying profitability," said Mike van Dulken, head of research at Accendo Markets.
Utilities were the biggest fallers as fears of rising bond yields took their toll on the high-yielding parts of the market. Severn Trent (>> Severn Trent) and United Utilities (>> United Utilities) fell 3.4 and 3.1 percent, with National Grid (>> National Grid plc) shares also down 1.6 percent.
Bank of America Merrill Lynch's fund manager survey found a net 44 percent of European investors were underweight on utilities.
"Usually you would see people have a look at this sector, but people are just transfixed on higher bond yields so they hate the utilities, they just grind lower every day," said a trader.
(Reporting by Kit Rees; Editing by Peter Graff)
By Kit Rees and Helen Reid
Stocks treated in this article : Publicis Groupe
, Unilever (NL)
, BHP Billiton Plc
, Anglo American
, Smiths Group
, Severn Trent
, United Utilities
, Imperial Brands
, Rio Tinto
, WPP Group
, Just Eat
, National Grid plc
, Delivery Hero