Spanish Prime Minister Mariano Rajoy's People's Party suffered losses in local elections, throwing his re-election into doubt later this year and opening the door for the anti-austerity Podemos who might challenge the euro zone project.
Financials trimmed over 9 points off of the FTSE 100 <.FTSE> index on the first session back following a long weekend extended by Monday's public holiday.
Britain's banks that have the most exposure to the euro zone such as Royal Bank of Scotland (>> Royal Bank of Scotland Group plc), Barclays (>> Barclays PLC) and Lloyds (>> Lloyds Banking Group PLC) were down between 1.2 and 1.6 percent, among the index's biggest fallers.
Asia-exposed banks outperformed, with Standard Chartered down just 0.3 percent and HSBC (>> HSBC Holdings plc) up 0.5 percent.
Traders also cited concerns over Greek debt as keeping markets on edge. Greece intends to make good on its debt obligations but needs aid urgently to be able to do so, the government said on Monday.
Oil and gas shares also weighed, with Royal Dutch Shell <RDSa.L> down 1.6 percent.
Energy shares took nearly 13 points off of the index, with a rally in Brent crude pressured by a stronger dollar. The sector is also under pressure due to a campaign for funds to divest holdings in energy companies.
Britain's FTSE was down 44.00 points, or 0.6 percent, at 6,987.72 by 0747 GMT.
Low-cost airline easyJet (>> easyJet plc) rose 1 percent, one of the top FTSE 100 <.FTSE> risers, following a profit surge at rival Ryanair (>> Ryanair Holdings plc).
Ryanair's profits rose 66 percent in the year to March as passenger numbers grew almost three times the targeted level on improved service and lower fares, with a more modest 10 percent profit growth forecast for this financial year.
The results point to a brighter outlook for the sector, after easyJet's shares dropped 8.5 percent after reporting difficult trading earlier this month.
"The move today is a follow through on Ryanair numbers," Atif Latif, director of trading at Guardian Stockbrokers, said, adding he remained positive on easyJet shares despite its own disappointing update.
"EasyJet remain in the sector sweet spot (due to) a valuation discount to the sector, potential for margin expansion and low gearing. A special dividend is also still a possibility, albeit lower now," Latif said.
Royal Mail (>> Royal Mail PLC) was the top gainer, up 1.8 percent and hitting an 11-month high after Cantor Fitzgerald upgraded the stock to "hold" from "sell".
(Editing by David Holmes)
By Alistair Smout