Britain's top shares closed 1.1 percent lower on Tuesday, as weakness in banks outweighed strength in defensive issues, while sentiment was dampened by falls on Wall Street after disappointing corporate earnings.
The benchmark FTSE 100 closed 56.02 points lower at 5,154.15, slipping below the 5,200 level which it hit for the first time in more than 12 months on Monday.
A missed sales forecast by healthcare firm Johnson & Johnson cooled the mood on Wall Street. The world's biggest chips-maker Intel will report earnings after U.S. markets close.
"The FTSE is taking its lead from the U.S. The reporting season is going to be an important one because the market will be looking at not just companies' bottom lines but also the top line to see whether the recovery may be sustainable," said Mike Lenhoff, chief strategist at Brewin Dolphin.
Banks were the biggest drag on the index, pressured by prominent U.S. banking analyst Meredith Whitney's decision to cut Goldman Sachs to "neutral" from "buy".
Barclays, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered were off 0.3 to 2.9 percent.
HSBC was also down 1.9 percent after its Saudi affiliate SABB reported a worse-than-expected 19.8 percent fall in third-quarter net profit, hit by an increase in the scale of its provisions for bad debts.
U.S. banks JP Morgan Chase, Citigroup, Goldman Sachs and Bank of America are all scheduled to release third-quarter results later this week.
Energy shares reversed gains from earlier in the session, with BG Group, BP, Royal Dutch Shell and Tullow Oil down 0.3 to 2 percent.
Miners were lower as metals prices retreated across the board. Anglo American, BHP Billiton, Rio Tinto, Vedanta Resources and Xstrata shed 0.2 to 1.7 percent.
Bucking the trend, Kazakhmys gained 0.4 percent. The company announced it was in negotiations over a potential $2 billion loan facility to help fund major growth projects.
Lonmin and Fresnillo were up 1.9 and 1.1 percent.
Food retailers were also on the backfoot, with Tesco, WM Morrisson and J Sainsbury shedding 1.4 to 1.7 percent.
Marks & Spencer was the top loser, down 4.3 percent. The company earlier unveiled plans to upgrade its supply chain and boost its presence online and abroad.
DEFENSIVES GAIN
Tobacco and beverages were among the stronger sectors as investors turned to defensive stocks. British American Tobacco and Imperial Tobacco rose 1.2 and 0.1 percent respectively, while drinks firms Diageo was up 0.2 percent.
Earlier in the session, investors pushed aside weaker-than-expected British consumer price inflation data, which hit its lowest annual rate in five years and boosted expectation that the Bank of England (BoE) could increase the amount of monetary stimulus.
The Office for National Statistics said the annual rate fell to 1.1 percent, the lowest since September 2004 and below analysts' forecasts for an easing to 1.3 percent, below the Bank of England's 2 percent target.
Meanwhile, BoE Deputy Governor Charles Bean said the British economy has probably hit bottom and the worst fears of earlier in the year are likely to be unfounded.
