Worries about collapsed energy company Enron and Argentina's financial problems have knocked investors' confidence.
By the close of trading the FTSE 100 Index was off 39 points at 5164.6.
Confidence was knocked by worries about UK banks' exposure to Enron, which yesterday filed for bankruptcy protection in the US.
There were also concerns about Argentina's crisis, where the government moved to limit the amount of cash people could withdraw amid growing fears about the economy's future.
Among the banks on the slide were Barclays, down 3%, off 62p at £20.88, as it emerged it was a creditor at Enron's subsidiaries in the US to the tune of 126.1 million US dollars (£89 million).
The disclosure came after Barclays tried to calm investors by saying the US firm's collapse would not have a "material" effect on its business.
A profit warning from FTSE 250 advertising group Cordiant also hit confidence on the market.
Cordiant's shares fell 6% after warning profits would be hit by a further drop in revenue after the advertising downturn.
The group also upped the number of jobs it expects to cut by the end of the year to 1,100, between 400 to 500 more, and it plunged 5½p to 88p.
The biggest Footsie risers were Daily Mail & General Trust, up 45p at 685p, Enterprise Oil up 23½p at 449½p, Invensys up 4¾p at 103¼p and Standard Chartered up 38p at 843p.
Fallers were Schroders down 56p at 820p, British Airways down 11¾p at 191¾p, Amvescap down 50p at 950p and Brambles Industries down 13p at 327p.