Britain's blue chip share index fell on Friday to its seventh weekly loss in eight weeks as oil prices spiked to a new record, renewing investors' worries about the resulting effect on corporate profits.
Europe's second-biggest airline British Airways fell 1.8 percent after its ground staff voted to strike over pay.
The rise in US oil prices to a record $46.00 a barrel on NYMEX failed to have a knock-on effect on BP and Shell, which lost 2.1 and 1.1 percent respectively.
The FTSE-100 ended down 26.6 points, or 0.61 percent, at 4,301.5 - wiping out Thursday's 5.9 point rise in a choppy week. Declining stocks overwhelmed advancing issues by more than three to one.
Stubborn high oil prices and fears of slower US economic growth coupled with lack of positive news from companies soured investor sentiment, dealers said.
"Investors are wondering how sustained the oil price rise will be, and we think there are more attractive things to buy in the market," said Eric Moore, UK investment manager at fund manager Gartmore.
"We are trying to position ourselves in slightly more cyclical areas, where we think there's very good value now, like in construction, steel and aerospace."
Speculation over bid activity in the banking sector is expected to keep the sector in focus, dealers said.
Broadcaster ITV topped the list of gainers, up 3.3 percent on market speculation of a dividend pay-out.
Old Mutual was the top loser with a 2.2 percent fall, hit by a surprise South African interest rate cut on Thursday, which weakened the rand against key currencies.
Reported earnings at South Africa's biggest insurer are reduced by the rand's depreciation, because it reports in pounds.
Brewer SAB Miller, which gets up to about a third of its group earnings from its South African business, was down 1.65 percent.
HBOS, which is considering a bid to challenge Santander Central Hispano's agreed take-over of UK's Abbey National, edged up after Abbey said it was committed to its deal with Spain's largest bank.
Some analysts had feared that HBOS, Britain's largest mortgage lender, could overpay in a bidding war.
"With the markets going, this makes it a little bit harder for financial stocks to perform," said Brian Moretta, an investment manager at SVM Asset Management
"Bank and insurance stocks look cheap, with banks trading at eight to nine times earnings," said Moretta, who likes Aviva among insurers, and HBOS and Barclays among banks.
Elsewhere, shares in fund firm Schroders rose 1 percent after it beat first-half profit estimates and raised its interim dividend pay-out for the first time in five years.
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