LONDON: Britain's main share index fell to near five-month lows on Tuesday, with a deadlock in Greek debt talks pegging back equity markets while miners and airline IAG also lost ground.
The FTSE 100 equity index fell 0.3 percent to 6,688.67 points, near its lowest level since late January.
International Consolidated Airlines Group (IAG) was among the worst-performing FTSE 100 shares, falling 2.4 percent after a slump at rival Air France KLM weighed on European airline stocks.
Air France's shares fell 4 percent after the company said it was dropping some routes to cut costs.
Miners such as Antofagasta and Anglo American also weakened after copper prices tumbled to three-month lows, partly due to the impact of a stronger dollar. The prospect of the US Federal Reserve signalling that its first rate increase in nearly a decade will come in September pushed up the value of the US dollar and weighed on equities.
A stronger dollar makes dollar-denominated commodities such as copper more expensive for non-US companies, and can be negative for miners.
Higher U.S rates can also boost returns on US Treasuries, increasing their relative appeal over stocks.
Among small caps, APR Energy slumped 23 percent after warning its 2015 results would be significantly below market expectations.
The FTSE is some 6 percent below a record high of 7,122.74 points reached in late April, as concerns over Greece's debts have pushed European stocks down from their 2015 peaks.
Greece and its creditors have hardened their stances this week after the collapse of talks over the weekend aimed at preventing a default and possible euro exit.
"Crisis fatigue has gone from acute to chronic at this point and even the much-maligned and underestimated contagion factor is beginning to rear its head as peripheral bond yields head higher in concert with that of Greece," said London Capital Group head analyst Brenda Kelly.
The FTSE remains up by around 2 percent since the start of 2015, albeit less than an 11 percent gain on the pan-European FTSEurofirst 300 index.
While some investors have used the worries over Greece as an opportunity to sell out and cash in on the earlier market rally, others said they would look to buy into the FTSE on weakness.
"I am probably going to look to buy the dips down here," said Jeremy Steinson, head of trading at Killik & Co.
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