17.00: The FTSE has closed the day down 0.5 per cent to stand at 5519.04.
Biggest fallers in the blue chip index included the likes of Vedanta Resources and Standard Chartered, both of which fell by more than 3 per cent.
The falls come despite some optimism that a new prime minister in Italy could act as a catalyst to solve the country’s debt problems.
Italy paid a record debt interest on new bonds on Monday. Italy sold £2.6bn worth of 5-year bonds at a 6.29 per cent yield earlier today, a new eurozone record.
In Europe, the French Cac 40 and the German Dax were down 1.3 and 1.2 per cent respectively.
15.57: The FTSE 100 currently stands at 5506.40, a fall of 0.7 per cent, while the French Cac 40 and the German Dax are both down by around 1.5 per cent.
14.21: European markets remain in negative territory despite a positive start to trading this morning.
The FTSE 100 is now down by 0.43 per cent to stand at 5521.60. The French Cac is down 1.1 per cent, while the German Dax is down 0.8 per cent.
13.10: The FTSE 100 is down 0.5 per cent to stand at 5516.44. The French Cac and the German Dax are down 1.4 and 1.2 per cent respectively.
12.12: The FTSE 100 is down 0.5 per cent despite having risen in early trades.
The blue-chip index stands at 5516.89, while the French Cac 40 and the German Dax are down 0.8 and 1 per cent respectively.
10.51: The FTSE 100 is almost at parity with its opening price, standing at 5544.91. The French Cac 40 and the German Dax are down 0.5 and 0.1 per cent respectively.
9.53: European markets have lost early gains with the FTSE 100 now down by 0.1 per cent.
The German Dax and the French Cac 40 are down 0.2 and 0.4 per cent.
8.27: European markets have made small gains in early trades as hopes were raised that a new prime minister in Italy could be a catalyst for the country to solve its debt problems.
At 8.27, the FTSE 100 was up 0.3 per cent to stand at 5562.32, while the German Dax and the French Cac 40 were both of up over 0.5 per cent.
Marco Monti, an ex-EU commissioner, was appointed as prime minister by Italy’s president on Sunday.
Asian stocks have already jumped on the news, with the Hong Kong Hang Seng and the Japanese Nikkei 225 up 2 and 1 per cent respectively on Monday.
Italy faces a further test on Monday when it auctions a raft of Italian government bonds. Markets across Europe went into freefall last week after the yield on 10-year Italian bonds hit a high of 7.5 per cent, a rate considered by economic specialists to be unsustainable. It was feared that Italy, the third largest economy in the eurozone, would follow Greece, the Irish Republic and Portugal by needing a bailout. Former Italian prime minister, Silvio Berlusconi, resigned amid the market concerns last week.