The London market ended its nine-day winning streak as fresh concerns emerged over the Chinese economy and investors sought to lock in profits.
The FTSE 100 index slid 21.18 points to 6674.48 after banks in China banks tripled their debt write-offs.
Michael Hewson, chief market analyst at CMC Markets, said details of the upcoming review of bank balance sheets by the European Central Bank also weighed on financial stocks this side of the Channel.
But he added: “In reality we have been due a pullback for some time now given the recent run up, and given the fact that a lot of this week’s earnings reports have shown some worrying signs of weakness.”
Royal Bank of Scotland fell nearly 3 per cent or 9.9p to 352.1p as attention remained on the prospect of the institution being split up. Barclays was 4.4p lower at 268.2p while HSBC dropped 9.4p to 678.3p.
Other notable fallers included BT after UBS downgraded it to “sell” on fears that the market for its new sport channels may not be as large as expected. Shares fell 4.7p to 362.5p.
RSA Insurance was the biggest blue chip riser, up 3.1p at 127p amid renewed takeover speculation. Housebuilder Persimmon was not far behind, up 29p to 1,256p, after the British Bankers’ Association reported the strongest month for mortgage approvals since 2009.
Outside the top flight, bank note printer De La Rue slid 10 per cent, shedding 95.5p to 885.5p after its second profits warning in less than a year.
Blavod Wines was down 12 per cent at 1.1p after a £571,000 share placing. The funds will help roll out the relaunched Blackwoods gin, which uses extracts from plants growing on Shetland.