|London Stock Exchange |
On top of that, US President Donald Trump threatened higher tariffs on Chinese goods should a mini trade pact with Beijing fall through.
Oil prices were sharply higher meanwhile following two days of hefty losses, and the dollar gained ground against other major currencies on foreign exchange markets.
Crude oil prices surged after a rise in US energy stocks turned out to be weaker than expected.
In New York, the Dow index was off by 0.3 per cent in midday trading, while European markets had trimmed morning losses a bit by the close.
On the corporate front, Chinese online retail titan Alibaba said it could raise almost US$13 billion in Hong Kong's biggest IPO for nearly a decade after announcing the pricing of shares for the mega sale.
In Washington, the US Senate adopted legislation on Tuesday that supported "human rights and democracy" in Hong Kong and threatened to revoke its special economic status.
China subsequently summoned a US diplomat and threatened counter-measures.
"The global trading wind changed direction on Wednesday with benchmarks across the world drifting lower," noted ActivTrades analyst Pierre Veyret.
"This shift in investors' trading stance was caused by the US Senate passing legislation supporting protesters in Hong Kong ... Most investors now fear it could significantly impair negotiations and the signing of a 'phase-one' deal with Beijing," he added.
In addition, Trump raised the spectre of stiffer levies on Chinese goods, warning: "If we don't make a deal with China, I'll just raise the tariffs even higher."
While observers expect both sides to eventually reach some sort of agreement as part of a wider pact, there have been several bumps in the road so far, undermining investor sentiment.
"The announcement from the US president has hit stock markets" again, David Madden, analyst at CMC Markets UK, said on Wednesday.
"Recently we have seen the DAX (index in Frankfurt) at 22 month highs, and the (Paris) CAC 40 at a level last seen in 2007, so the threat from Trump has encouraged traders to exit the equity markets."
Key figures around 1700 GMT:
London - FTSE 100: DOWN 0.8 per cent at 7,262.49 points (close)
Frankfurt - DAX 30: DOWN 0.5 per cent at 13,158.14 (close)
Paris - CAC 40: DOWN 0.3 per cent at 5,894.03 (close)
EURO STOXX 50: DOWN 0.3 per cent at 3,683.88
Tokyo - Nikkei 225: DOWN 0.6 per cent at 23,148.57 (close)
Hong Kong - Hang Seng: DOWN 0.8 per cent at 26,889.61 (close)
Shanghai - Composite: DOWN 0.8 per cent at 2,911.05 (close)
Euro/dollar: DOWN at US$1.1065 from US$1.1078 at 2100 GMT
Pound/dollar: DOWN at US$1.2919 from US$1.2926
Euro/pound: DOWN at 85.64 pence from 85.71 pence
Dollar/yen: UP at 108.67 yen from 108.54 yen
Brent North Sea crude: UP 2.7 per cent at US$62.55 per barrel
West Texas Intermediate: UP 3.3 per cent at US$57.02 per barrel