Britain's FTSE 100 index closed lower on Friday to end the week more than 2 percent below Monday's 4-year record high, led by telecoms firm Cable & Wireless after it delivered a sales warning
Resurgent heavyweight oil stocks and an early charge on Wall Street following better-than-expected US jobs data lent some support to the market but could not outpace further selling in mining stocks such as BHP Billiton.
The FTSE 100 finished 10.1 points, or 0.2 percent, lower at 5,362.3 points - its lowest finish since mid-September - with Wall Street losing much of its momentum by the London close.
On Monday, the FTSE closed above 5,500 points for the first time since August 2001 but two days later suffered its biggest daily points fall since the July 7 bomb attacks on London.
"Strategically, one wants to remain positive but, tactically, you may want to be a bit more cautious because it may come back a bit more," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities. "But if we do get the rebound we could quite easily come back up to 5,500."
"The fundamentals that have been pushing it forward like earnings growth, dividends, share buybacks, corporate activity and valuations will remain in place - it will take a lot to derail them."
Investors took flight from global equity markets this week on inflation concerns and the prospect of further US interest rate rises.
Cable & Wireless was the top faller, down 14.1 percent after trading at its lowest levels in 8 months, wracked by concerns over margins at its retail business. The firm forecast a drop in first-half revenue at its core UK business, an area it has been trying to fix for years.
"Also the Energis deal (take-over) is going to take longer to come through than previously expected," said a dealer, noting a further disappointment.
Mining stocks fell broadly, taking about 6 points off the index, with Billiton down 3.5 percent and Antofagasta 2.2 percent lower despite gold and copper prices hitting record highs. This week, traders have reported investors booking gains from the sector's recent surge.
Online gambling firm PartyGaming fell 6.4 percent. The stock has been under pressure since losing a third of its value on September 6 after the company said growth in the sector could be moderating.
On the upside, pharmacy company Boots climbed 1.9 percent after it struck a deal to sell its non-prescription drugs business to household products firm Reckitt Benckiser for more than expected. Boots also announced a plan to merge with Alliance UniChem this week.
Reckitt's shares also rose 1.9 percent after it said the purchase would boost earnings immediately.
Shares in British Airways advanced for the sixth straight session to head the list of FTSE gainers, boosted by upbeat analyst comments following passenger traffic numbers on Wednesday. Traders said a fall in oil prices through the week to around $61 a barrel - about $10 below records highs hit in the wake of Hurricane Katrina - had also helped the stock.
BA closed 2 percent higher on Friday, further bolstered by news its caterer Gate Gourmet and the Transport & General Workers Union had backed a plan to cut jobs, ending an industrial dispute at Heathrow Airport.
Heavyweight oil and gas stocks ended a run of losses this week to provide some support to the market. Traders said the sector was due a technical bounce after its fall in line with fuel prices.